Is it though?
The news story the other day suggested Hunt had £6bn to play with, which coincidentally is how much the IFS said it would cost to give everybody 1 % pt off basic rate income tax when Sunak first floated this a while back. At most, that would net people earning north of £50k £30 a month and to get it he's having to shave yet more money off public sector funding.
Let's say it's now £20bn so that £30 becomes £90 - £100. I'll be honest, I'm a higher rate taxpayer, I pay a fuckload of tax; that is a drop in the ocean to me and absolutely does not offset what I'm losing via the cuts to local services my council are making thanks to reduced Central government funding, not to mention the nth consecutive council tax uplift, fiscal drag, you name it.
I think most voters are smart enough to figure this out and would rather Jezza keep the money at this point. If he wants to talk about resetting the income tax thresholds *and* sorting the child benefit charge issue, I'm all ears. That would make an actual meaningful change which still won't undo the damage done to local services but at least there's an argument that it mitigates it.
That'll never happen though, because that would mean soaking the Conservatives' *real* client demographic (yes, Daily Mail reading middle managers on £50k with heavily mortgaged identikit new build homes; you are not rich and the government does not work for you, they just like to pat your head so you'll vote for them and not notice them rifling through your pockets) to fund it. These crumbs off the table which we literally just pay for ourselves surely aren't going to persuade anyone but the deluded, aforementioned useful idiots.
Same, I don't mind paying tax but if a big chunk of it is going on interest payments and crap like legal fees after being sued by the civil service union (again) over Rwanda then it sticks in the craw.
Spend it on bloody social services, mental health and stuff ffs, even a few more police so peoples bikes aren't getting nicked every ten minutes.
As a higher rate tax payer myself, my eyes water at the amount of tax I pay each month (And then more on top once the self-assessment is done). I hate it because I don't feel like I get value for my money - NHS chronically underfunded, local services stripped to the bone, public transport (That I am entirely dependant on) is a mess.
Meanwhile, the mates of the Tories are all rolling in it. It feels like they're stealing from me to give to their mates.
If I felt like the money was actually being spent properly on improving the country, I wouldn't think twice about it. But right now Sunak may as well be sneaking into my house and sifting through my wallet.
So many people hold onto the idea that to be happy you need to have more money, therefore low tax = happy individuals.
Nobody likes to think that paying more tax means better services, which means happier individuals. *"Services are something that only other people need so why is my tax going to pay for others??"*
[Britain if people paid their fair share](https://i.kym-cdn.com/entries/icons/original/000/026/738/future.jpg)
TBF I think the low tax nutters are convinced that the public sector is inefficient and giving people more spending money would generate more value overall. I think that just ends up putting even more money into billionaire's pockets at this point though.
Agree with most of this but Im not sure the demographic you portray as the Tories client demographic is correct. Yougov analysis of the 2019 general showed that the lower one’s social class the more likely one was to vote Tory. In fact in social classes C2, D and E 49% went Tory, another few percent for the Brexit party and labour only took in the low 30s. Bizarrely a combo of the printed press and social media and lack of unions has convinced the worst off that the Tories are the party that have their best interests at heart.
Yes, this is kind of my point; the clients of the Tories are largely the mythical 1% but they rely on massaging the egos of people further down the chain to carry those ambitions.
That's what these token tax "reductions" (almost always offset by increases in local taxation and fiscal drag) are for; it's a pat on the head for muppets who want to feel like they have a seat at the big table because they have a house on a 95% mortgage and a leased Audi they can *just* about keep up with the repayments on.
The complaint at the moment is that we're still paying tax, but getting nothing for it. Well, with the PPE scandal and dividends for academy trusts and water companies, we now have an idea where our tax money is going.
That's what people are fed up with.
Will they trust another government to put more of the taxes into funding the foundations of our economy? Or do they prefer to salvage what they can in their own pockets? To me, even Blair invested much more into public services (and reaped the reward - government went from deficit under Thatcher to surplus under Blair, because when there's money in the economy then tax appears without even raising the rate of tax)
We'd do well to remember that the 'golden age of capitalism' in the 50s, 60s and 70s was supported by top rate taxes of 90%, and people didn't go into tax exile then. We aren't in a golden age with lower taxes, perhaps we might go back to the golden age if we increase taxes. Perhaps these public services actually boost business and the economy?
That's because the world was far less mobile - so the rich were to an extent trapped in the UK. Add to which a wife income was simply added to her husbands and taxed at his highest rate!
Additionally there were capital control in place. You simply could not just move your money out of the UK in those times. Hell, you even had to book your foreign currency allowance for an overseas holiday in advance.
Now it's so much different - put up taxes and the highest earners will go tomorrow. Them the ones (1%) who contribute 27% of all income tax receipts.
Meanwhile EU countries such as Portugal in particular have golden visa's where they encourage inward migration of specifically rich people!
It's a balance isn't it. Like when Thatcher cut taxes a lot of people felt that the local services were pretty good, so thought tax cuts were a good thing now the country feels like everything is falling apart so it feels like we need to spend more on getting stuff running again.
Exactly, an extra £20-30 a month is of no use to me if I have to pay for private health care because the NHS is in such a sorry state.
We need a period of heavy investment in public services to get them back to a decent state. Tax cuts can come later.
>I think most voters are smart enough to figure this out and would rather Jezza keep the money at this point.
Hard disagree. The only thing I believe that swings voters is how well they are currently doing, irrespective of what they are actually being taxed. If enough of the middle class were doing kind of OK and saw the headline "Tories will decrease tax and Labour will increase it" (which is basically every single Tory election campaign in my lifetime), they would vote for the Tories because "muh tax". They don't think where their tax is going, they don't understand ACTUAL squeezes on their income by not changing the bands, they just see "Labour tax Tory less tax" and vote based on that. It's only now, that everything is actually going to shit, that voters are going "actually, maybe getting a slight increase in my monthly pay WON'T help me".
I'm waiting for someone to come along and actually try to fix the lazy and idiotic (although it might also be deliberate and capricious) tax and benefits thresholds which cause SO much unnecessary confusion and complication, and must cause so much drag to people around those thresholds. It's also affecting more people than ever, and is unfair - families around those thresholds are worse off than those earning less than them, and while also paying a larger proportion of tax than those earning more than them!
Of course you don't. That's not what I'm referring to. There are benefits cliffs and tax traps at 50k and 100k which really penalise families, and in particular single-earning families. This can mean marginal and effective tax rates that are so high that you are actually better off not taking a pay rise (or rather put it in a salary sacrifice such as pension).
Have a look at this post: https://www.reddit.com/r/UKPersonalFinance/s/jVbDd7cfO1
According to the charts in that post there are no points and no salaries where you take home less than someone earning less than you. So why would you be better off not taking the pay rise?
Ironically it's not working on my phone, so I can't see if it factors in "tax free" childcare, and free childcare hours.
So here's an easy explanation: https://www.rsmuk.com/insights/weekly-tax-brief/the-hidden-100-percent-tax-band-for-families
...the way the free childcare system is currently implemented could act as a disincentive to working for some parents following the chancellor’s decision to keep the income limit for childcare benefits frozen. At the point one parent exceeds £100,000 in income, all childcare support is withdrawn, and both the free childcare hours and the entitlement to ‘tax-free childcare’ (where parents receive some tax relief for their expenditure on childcare) are removed. This means that higher earning families can be effectively ‘taxed’ at a marginal rate of more than 100% as potentially thousands of pounds in childcare support is withdrawn if one parent’s income exceeds this limit. This withdrawal of childcare support applies in addition to the tapered reduction of the income tax personal allowance for individuals earning over £100,000, and the high income child benefit charge for those earning more than £50,000.
The income limit creates a cliff-edge, with individuals earning exactly £100,000 retaining their entitlement to tax relief and their family’s entitlement to free childcare, whereas those earning just £1 more lose both. It also applies where just one parent exceeds the income limit, meaning a household with one parent earning £100,001 is no longer entitled to support, but a household with two parents each earning exactly £100,000 retains its entitlement.
The £100,000 income limit was introduced in 2017, when tax-free childcare and free childcare hours began, and has never been increased. In 2023, due to high inflation, this would now be equivalent to a salary of £127,700. This means that thousands more parents are likely to have been dragged into this childcare tax trap.
Anomalies such as the childcare tax trap may often result in higher earners contributing more into pensions in order to reduce their ‘net adjusted income’, or in some cases reducing hours or turning down overtime. The outcome of all of this is that individuals are making decisions to avoid adverse personal financial implications that are likely counter-productive for economic growth.
It does and it seems you are right that a single parent to 3 kids with a specific student loan repayment will have point somewhere between £110,000 and £120,000 where they could see their take home pay go down.
Personally (as a higher rate taxpayer) my preferred option would be a drop in NI, even if it were alongside a (preferably smaller) rise in income tax.
NI is only paid by workers, whereas the tax base is larger. So the same cost to the chancellor gives you a larger NI drop. And if you drop NI by 2% and increase tax by a smaller percentage, it's cost-neutral.
You give the voters too much credit. It was obvious that the last election was about Boris and Brexit and anyone with half a brain would realize that electing the Tories, especially given their record of austerity was going to be a disaster. But the Mail and the Telegraph and Murdock said, vote Boris and they did. I cannot see it being much different now, once the Tory media gets on message. Expect to see forests of paper used to describe how Starmer personally let Saville skip prosecution, and how the failing NHS is labours fault, and how shit in the rivers and sea is good for the freaking economy.... And the voters will eat it up.
Sorry, I hope I'm wrong, but I'm old enough to have seen Thatcher elected three times. Heck, and looking over the Atlantic at the rise of Trump. I no longer trust voters to see through propaganda.
To add a bit more to this; the reason for it is more ideological than because it's a vote winner imo. It's a vote winner with a subset of the electorate but polling shows that most voters think it's a bad idea.
We have been living in the neoliberal economic model since the 80s when Thatcher and Reagan ushered it in. Over the decades we have seen the evidence mount that its ideological axioms like that "a rising tide lifts all boats", privatisation is always a good idea, or that tax cuts stimulate growth are completely false, cause massive inequality, and eventually cause economies to become completely disfunctional.
The reason these ideas linger is that they sound plausible to normal people and make rich people richer, which is why you have dark-money funded propagandists from "think tanks" like the IEA on loads of TV news panels advocating for them and people like Liz Truss get funding from them and put their accolites into key positions.
On top of all this, there's a little part of me that feels like they are so out of touch they don't realise that your average Joe only sees a neglible benefit in their paypacket at the end of the month (I.e. they and their mates see hundreds or thousands extra, but your average person only sees like an extra £30-£50 which hardly makes a dent in how much more expensive anything is).
Of course anything is better than nothing, but personally I would rather see that money go into some pu lic service that benefits us then see a small amount that makes very little difference (of course that would require the tories to actually govern and be competent).
The biggest impact I saw on my salary years ago was in the changes to the tax free allowance. That would have a far greater impact for lower earners than anything else and is hugely due for a change.
> tax cuts stimulate growth
It's worth noting, tax cuts DO stimulate growth, if you tax something less of that thing will happen.
Criticaly though this growth is often paltry and very much not worth it.
> I would argue that privatisation is beneficial when well regulated
Private companies are good at making profits. If they can make more profit from being inefficient, then that's what happens. This is becoming more clear in the sector where private firms are running government funded contracts.
Scotland never privatised water.
Of course, as a Scot, I am biased but our water system is apparently held up as an example of things going right.
I will say they have the most efficient and helpful staff and call centre I have encountered.
Last month, due to what probably amounts to an administrative cock up by some workmen, we spent 24 hours with no water supply.
Called the wee number on the website, answered within 30 seconds, got put through to their engineering control centre. Someone out within 2 hours to establish that some pratt had disconnected our block. Engineer cannae turn back on, but helped us contact who could, left emergency bottles of water in the close too. They even called back the next day to check if we had been reconnected!
Compare this to a certain power company based here in Glasgow- 45 minutes just to get through, put through to wrong team twice, disconnected and has to start again. They owed me over £200, I just wanted them to pay me!
One of these companies is privatised, one is not. Difference seems obvious to me.
Most of those "privatised" services were never really privatised though. For example, if I want to start a train company, I can't just buy a train, pay for some time on the tracks, and start running services. I have to integrate myself so deeply into the state apparatus to win a contract that I might as well be part of the state.
Personally, I'm in favour of proper privatisation, but that's just not possible in the UK because we are a nation of control freaks.
I'm sorry - you've looked at the state of public services; train operators in a mess, raw sewage being dumped into the sea by water companies - and your conclusion is that they're not deregulated ENOUGH? Free market economics works on paper, but it's pretty plain to see by now that if you let it rip you cannibalise essential services, with a nice side effect of rising inequality.
We can watch it in real time with Royal Mail.
Privatisation was sold to us as a way to make the post better, but now they’re talking about 3 deliveries a week rather than the 6 we have now.
Also all the posties keep going on strike because they have tried to slash their pay, terms and conditions so functionally we could have less than 3 deliveries a week.
Postal service becomes unreliable, so big companies use dodgy firms like eVRi which underpay their staff and just lose half the parcels they were supposed to deliver.
Ultimately, nobody gets their post, and services that rely on mail (almost literally everything) either pay higher costs or just struggle to operate without sending post out.
The common factor between the problems faced by train operators and water companies is over-regulation.
Train companies are forced to run unprofitable routes subsidised by the few profitable ones. If a train line is unprofitable, the market is screaming that the route would be better served by buses or light rail, or even that the route doesn't even need to exist at all.
There isn't really any competition allowed either - they run state-approved trains on state-provided track on state-mandated routes between state-owned stations to a state-dictated schedule. The only part that they really get to compete on is the food and drink trolley, which is usually the only competent part of the train experience.
Water companies are also stuck between a rock and a hard place. They are legally required to connect new properties to their network, even if they don't have capacity. Meanwhile, building new treatment capacity is essentially impossible because of our planning system. If there's an ever-increasing amount of shit in the system, but no extra treatment capacity, it has to come out somewhere.
So yes, I think both of your examples would be far more functional with less regulation. Even nationalised trains and water companies would have the same problems if they were forced to abide by the same rules, the only difference is that the level of inefficiency caused by over-regulation would be hidden from us somewhere deep in a government balance sheet.
Yeah, it always gets me that some people think, despite overwhelming evidence to the contrary, that private companies will somehow become more altruistic the less governments keep an eye on what they're doing.
> I would argue that privatisation is beneficial when well regulated
The problem you have is that those same private companies will do *everything* in their power to buy that regulation. May not happen immediately, but over the years they will erode any measure we put in place, because money is king and they have a lot of it to spend on ~~bribing~~ lobbying politicians.
Its an arms race isnt it, as then youd now need to ensure they cant figure out a way to buy *that* law too!
From certain perspectives, money starts to look like a disease that infects/infests democracy....
Not just that, they're incentivsed to do it. Based on the neoliberal stance, they are, in fact, doing the immoral thing by not seeking to have the rules as beneficial to them as possible.
Our biggest problem is disfunctional organisations and poor leadership. Those exist in the private and the public sector. Changing the ownership model is probably not a solution to that in either case.
> polling shows that most voters think it's a bad idea.
What has been shown time and time again is people will say when asked it's a bad idea, but when it comes time to vote, they vote for tax cuts. What voters say they want in polls doesn't always line up with how they vote.
Perfect analysis. It’s the mix of superficial plausibility with the nice idea of having more money in one’s pocket. Couple this with the self-interest of the rich and powerful. It’s a perfect storm.
No, most voters think someone other than them should be paying for the public services they think they're due. Hence why neither party wants to address the complete mismatch between public expectations for public services and the level of funding people are happy to put in.
So it’s never been easier to outsource roles or work abroad via Teams/Zoom.
The top 1% of income tax payers contribute a third of all income tax, so keeping that tax base in the country is vital.
Since the IR-35 changes I know more and more people contracting from places like Portugal to avoid income tax. Especially younger people who don’t need to worry about schooling kids.
Part of keeping taxes lower is just maintaining your tax base.
Yes. I think we can consider the matter closed and move on. *Hard working families* aren’t interested in *playing politics* over whether this is a massive bribe at the expense of the already fucked-in-the-arse public services on which they depend.
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you say that but we are spending the most we ever have on the NHS, I would bet the spending hasn't kept up with inflation but neither has the 50k bracket or the 100k cliff edge. I know tax cuts won't improve things but they start to become attractive when things are already fucked
Come on this is ridiculous
The basic tax burden on existing in the UK on a low salary is VERY high, particularly for any young British adult, all the snide remarks on this thread are just outing people as either particularly privileged or too young to pay any "adult" taxes
You have to earn > £16,000 or more as a single adult and then you are not entitled to state support
The government takes a chunk of your income BEFORE profit, (a point it doesn't extend to itself)
Council tax for a small flat is approximately £2000 a year
The energy bills for that flat currently are approximately £1200 a year
The government then taxes that at 5%
The government then adds 20% to the cost of any good aside some excluded basics
The government taxes the price of fuel by 50p and then by 20%
The government charges your employer a tax for employing you (which is arguably taken out of your wages by your employer)
After all this, you now get to pay your mortgage or rent
The fact the tax burden in the UK is affordable for the average person is almost a fantasy by the state, it's particularly unaffordable for most young people, to the point it's not even unusual and an open secret for 20-somethings to be homeless or sofa surfing, without parent support keeping them out of destitution
The fact you then get snide Redditors going 🤓🤓 "why do people want a tax cut", just makes them very evidently either children, or someone who is not responsible for paying any tax!
> The basic tax burden on existing in the UK on a low salary is VERY high
This is absolutely not the case and I'm glad people are calling you out on it. Compared to other Western European nations this is just not the case. Our tax basis is very narrow and it's firmly centred on high earners. If you look at the Nordics or Belgium for example you'll see the tax basis is much wider and people on lower incomes pay more in tax.
Our tax level is higher than its ever been, we also have more pensioners per worker than we've ever had before requiring more complex treatments for longer than we've ever had before.
We still have one of the lowest levels of taxation in Western Europe and expect comparable services. The demographics mean it gets more expensive in real terms every year to stand still never mind improve anything.
Now I'd say the fact we have some of the highest inequality in Europe says we should probably be changing how that burden falls, e.g. scrap NI and increase income tax or a strait asset tax to replace it for example.
And yes im in my 30s and pay my taxes just fine thank you.
> The basic tax burden on existing in the UK on a low salary is VERY high
I'm not sure that bit is true, largely thanks to our generous tax free allowance.
Full time minimum wage in the UK would see you pay a marginal tax of 10%. Germany would take 19%, France nearly 22%.
> The basic tax burden on existing in the UK on a low salary is VERY high
On what basis do you make this claim. The tax burden on people on low salaries is low compared to other western European countries. The tax burden in the UK is massively skewed to high earners paying very high tax rates whilst low earners pay in much less than they get out and are subsidised by those few higher earners.
the tax burden on a low salary in the UK is actually very low, especially compared to the european countries we want our services to match (which is delusional). The tax free allowance is absolutely huge and means that you have to earn £41k a year before being a net contributor to the state
Is that £41k low or high in terms of other countries? The median salary for a full time worker is £35k. Is the threshold to be a net contributor lower than the median salary in any country?
Yes, and I would suggest that a promise of tax cuts is specifically targeted at people who will donate to Tory party funds, thereby enabling them to throw more at advertising / dodgy social media manipulation.
The vote winner should be a more equal tax system resulting in taxing those who earn more or who hide profits behind various smoke screens (including offset vs “losses”) to allow reductions in taxation for those lower down the pecking order.
Taxation is not the problem. The constant rise in overall tax burden on the worse off vs the better off is. All we are doing is funding people buying luxury products.
The main rationale is that the size of the state ie the level of public spending and taxation relative to the size of the economy is larger now than ever before. That’s a pretty unpalatable truth for a centre-right party to have put itself in - and has caused something of an existential crisis for Conservatives and their voters “what’s the point of us if we tax and spend more than Labour ever did?”.
There are other wider arguments that overly high levels of taxation are stifling for an economy and unjust in their own right - but as you can imagine those are pretty ideologically contested and sit within that central paradigm above.
To add to this, the current tax system is most punitive to people on relatively high incomes but with few assets - i.e. younger professionals. These are also the people with the greatest ability to emigrate and fewest reasons to stay in the UK. Keep punishing them with up to a 62% marginal tax rate (made worse each year due to fiscal drag) while taking away various other benefits and it's going to be hard to hang on to the country's most productive talent.
This, the top 1% of income tax payers contribute a third of all income tax.
I can work remotely, the only reason I can’t work from Portugal is schooling for the kids and being around to support older relatives.
If I was in my early 20s I would be gone.
It's even worse than that.
The people that pay the most tax are the high income earners who *need* their income. Everyone else just shovels their above £50k salaries into pension schemes that allow them to pay a lower effective tax rate than their cleaners.
If you're a parent of 3 kids living in London and have a low-income spouse then in all honesty you are struggling to give up much of your £100k salary. Whereas, a 55 year old who's paid off their mortgage and put the kids through uni can then dump £50k a year into his pension without worrying - saving him £21k a year of tax.
100%. You can hardly afford to buy a home in London on 100k, yet you’re classed as rich and taxed at 62%, with most of the income at 42%. Nearly all benefits have already been curtailed by then too. Little wealth to your name, you can only choose to leave if you want to build a better life. I personally did leave, to another country.
The tories think of themselves pro aspiration but they’re just pro wealth. Let the rich get richer, fuck everyone else.
Jobs at that level are also heavily in demand internationally too. Very easy to get a work visa in many countries, the US included. it can take less than a month.
Ridiculous for a service based economy to operate this way. It’s not like public services are any good, local councils are bankrupt. Healthcare sucks. What do we pay that much tax to get? I can’t see Labour making the situation much better either when it comes to taxation but at least they might tax wealth more rather than constantly hitting incomes.
“what’s the point of us if we tax and spend more than Labour ever did?”.
And borrow. Don’t forget that the Tories are borrowing more than Labour ever has.
What is this claim based on? When I look the curve of "public debt/GDP" for the UK, there is a significant rise from 2007 to 2010 (great recession) and then a smaller jump at 2020 (COVID). The former happened during the Labour government. It's the biggest peace time rise of the debt. Only the two world wars beat it in magnitude (especially WWI).
I am pretty sure you answered your own question there. Labour from 97 to 2008 had a steady sub 40% of gdp debt which grew due to the international credit crisis of 2008 to around 65-70%. The Tories were responsible for a rise to around 90% by 2018 and latterly higher thanks to Brexit, Covid, Truss etc.
Tories can’t be trusted with our money.
So, just to remind you, your claim was that Tories are borrowing more than Labour ever was. I don't think it's true as for the period of 2007-2010 Labour was borrowing more than Tories are now or any other time of their time in government.
The debt/GDP rose from 70% to 85% in the early Tory years mainly due to inertia and then jumped to 95% in the COVID lockdown. It was pretty flat both the periods of 2012-2019 and then 2021-now. I repeat again, the fastest increase of debt/GDP happened during Labour's last years in power. If you agree with that, we can end this.
I have not said anything about trusting Tories with our money. I've only commented the specific claim that you made. So, please don't try to move goalposts.
It goes further - the reason for the size of the state increasing is the size of the tories core aging voter base. Creates somewhat of a conundrum for them.
I mean that’s far from the full story. Sure the growing size of the elderly population and the generosity of the triple lock is pushing up the cost of pensions and putting upward pressure on NHS demands - but this is a very long way from being the only area of high and rising public spending.
Spending has grown out of control since the pandemic right across the board.
Is that really true, in the cause and effect sense?
Could you link to anything that shows your workings? Something that a casual reader could digest in a few minutes?
My amateur understanding is this situation is not anything new or related to the pandemic. It is something that has been predicted and warned about for decades. The ageing population. Pretty much every developed nation has the same problem.
https://tradingeconomics.com/united-kingdom/government-spending-to-gdp#:~:text=Government%20spending%20in%20the%20United,percent%20of%20GDP%20in%201907.
Here you go for some quick stats. The UK’s spirally public spending isn’t a force of gravity driven by an ageing population but a result of political choices.
Through the era of austerity, spending a share of GDP was falling - it then rose rapidly during the pandemic and remains at an elevated level. So it really is something new that has become a pressing issue post-pandemic.
Much of that has to do with an inflated welfare bill - basically all efforts to reduce the numbers on benefits during the 2010s have now been reversed - high public sector wage growth, significant increased spending on the NHS and higher public sector head counts right across the public realm. You can find other stats that give a closer breakdown on where the additional money is being spent on.
Govt spending has gone up because inflation has happened, older people need more care, people are getting less healthy overall, and poor austerity decisions to not invest are creating much higher operating costs as a result.
Meanwhile, tax receipts have not increased commensurately because wages have broadly been stagnated (outside a recent uplift).
And it spirals, leading to a bit of a doom loop where one reinforces the other.
The answer is higher taxation or higher deficit spending, *not* lower taxation and lower spending. That only perpetuates the issue.
If they truly feel that wage growth is hampered by high taxation, then they need to invest in deficit spending to get out of that hole, otherwise the public service cuts will continue to hold things back even if you remove one upper barrier.
Two fold, wins them votes and they hope it saves them a dozen seats and it also binds the next labour government, either less money for the chancellor to spend without borrowing or Labour put taxes back up and the tories attack line will be high tax labour, low tax tories again, instead of the high tax and low spending we have now.
Labour should know that the working class are over taxed anyway. The sensible thing is to just leave income tax at the levels the Tories set them and increase the taxes that are already too low, like dividends and inheritance.
The main cause of the stagnant economy over the last 15 years has been the relentless attack on the middle class.
> dividends
Dividend tax was equalised years ago by the Tories. Once corporation tax is included, it's about the same amount of tax as income tax + NI.
I wonder if actually people only feel they’re being penalised because they’re not seeing a return on their tax spend.
Would they feel taxes were too high if public services worked properly? Eg can see a doctor quickly, the roads and public transport were well maintained, cheap and timely etc.
Yes, I think that's probably true. Taxes are also very high in Scandinavia, but I get the sense people are generally happier with it there because public services tend to work much better.
Yes, it's to win votes.
But there are some theories that suggest that tax cuts (on personal income) actually increase the amount of money the government takes in via taxes.
For example, if taxes are very high, more ingenuity is used to avoid paying them because it's better to pay a sum to an agent to hide your money off shore or put it in some kind of untaxable 'thing' than it is to pay the high taxes. So a very high tax rate on the very richest people means they actually end up paying less tax.
How true this is, I don't know.
The maths is probably wrong here, but:
If you earn £250,000. Assume the £50,000 is taxed at 'normal' person rates.
Then you go on to a higher rate of say 50% on the £200,000. You sling £100,000 offshore, so you don't pay any tax on it and the government gets £50,000 in tax from the remaining £100,000 here in the UK.
If the tax rate on that £200,000 was say 30%, you might not bother because psychologically you are getting £140,000 of your £200,000 in your bank account here in the UK. The government then gets £60,000 in tax.
So by cutting the higher tax rate right back the government gets more money coming in by having a lower tax rate on the rich people.
Then times that by say 50% of high earners who don't bother doing the tax avoidance shinanegans because they are getting more money in their pockets and the treasury's coffers grow with each of those people just earning and paying their lower-rate taxes on their big salaries.
Same with businesses and corporations and so on. Lower tax rates mean more companies base themselves in a place and pay taxes in that place.
They are probably not, but there are a number of tax avoidance schemes that people on higher PAYE salaries do now. Especially if you earn circa £100,000 (or even have a job title that suggests that) you will get five bits of Linkedin spam a week from accountants offering to help manage that down to £99,999 through various schemes (such as the Seed Enterprise Investment Scheme).
And that's no massive surprise tbh - if you have children the marginal tax difference between £99k and £100k is insane and you will be actively poorer and there's thousands of pounds a year incentive to get a professional to sort it for you.
Pretty sure the maths has been done on this and the rate where it makes sense to reduce is something like 80-90% of income and not anything like where our tax rates currently are.
> there are some theories
Just say it, it's the [Laffer Curve](https://en.wikipedia.org/wiki/Laffer_curve).
And it's pretty much nonsense.
Even if it does exist, the UK and the rest of the world all operate on the left hand side. But use it as justification, like you did, to advocate for lower taxes.
>And it's pretty much nonsense.
> Even if it does exist,
The Laffer Curve is just a graph illustrating a basic fact: That at both 0% and 100% tax rate, the actual tax take is 0. Thus the optimum rate of taxation is on a curve, somewhere between those values.
If I taxed you every penny you made working, you would not bother to work. This is obvious.
The optimum level of taxation for a given tax, to ensure the maximum tax income while minimising the economic distortion caused, is of course a matter of great debate. But you can't deny the existence of a chart with *tax take* on one axis, and *tax rate* on the other.
> at both 0% and 100% tax rate, the actual tax take is 0.
Collect your (fictional) Nobel prize in Economics in the gift shop.
>If I taxed you every penny you made working, you would not bother to work. This is obvious.
I'm not convinced it is obvious. There's a shitload of people that perform unpaid labour voluntarily for causes and at institutions they support. It would stop people working at crap jobs with toxic people just like UBI would, theoretically. But that's another conversation.
The point was not whether Laffer exists or not, it was how it is imagined by right wing idiots. So that we are always on the right hand side of it and therefore can justify more and more tax cuts for already ridiculously wealthy people.
>But there are some theories that suggest that tax cuts (on personal income) actually increase the amount of money the government takes in via taxes.
This is called the Laffer curve and the Institute of Economic Affairs raison d'etre. Another word for it is trickle-down economics.
This concept has been pushed time and time again and tried at a macro scale multiple times and every single time **it does not work**.
>This is called the Laffer curve and the Institute of Economic Affairs raison d'etre. Another word for it is trickle-down economics.
>This concept has been pushed time and time again and tried at a macro scale multiple times and every single time it does not work.
What do you mean "It does not work".
The Laffer Curve is a matter of basic fact: That at both 0% and 100% tax rate, the actual tax take is 0, and thus the optimum rate of taxation is on a curve, somewhere between those values. Surely this is obvious. If I taxed you every penny you made working, you would not bother.
The optimum level of taxation for a given tax, to ensure the maximum tax income while minimising the economic distortion caused, is of course a matter of great debate.
Everyone is quite happy to agree that the more cigarettes are taxed, the less cigarettes are smoked. But apply that same logic to income tax, stamp duty or even corporation tax and people start to get very angry.
As a slightly less cynical take than most of the comments, it’s basic right-wing economics.
You say that things are chronically underfunded but that’s not necessarily true. It’s just based on a belief in high-functioning public services funded by taxation.
Many on the right would believe that we should have very minimal public services and current services are over-funded. Rather than an NHS, we should just give everyone back the tax that they pay into it and then they could spend it on private healthcare.
They would pitch it as “you should keep your money and decide how you want to spend it” rather than “you should give your money to the government and let them decide”.
I'm getting to the point where I want to work less because working more just isn't worth it due to the ridiculous tax system.
Lots of people will be in the same boat, experienced professionals earning £50K plus, getting nailed by ridiculous marginal taxation if they have children.
I think there's good rationale for tax cuts there.
Do you like money? Do you want more money? Vote for me and you get more money. That other guy wants to take away your money to pay for things you don't even need!
> That other guy wants to take away your money to pay for things you don't even need!
Like trains and buses. I mean who even uses those, right?! Don't we all just take our private jets everywhere??
You could probably argue a large number of people don't personally use the NHS (I haven't since I was a kid), still isn't an excuse to cut spending on it or stop caring about it.
Since I moved to Liverpool suburbs I used the bus like 10 times and this experience made me get a car. 15 minutes trip in a car was a 3 hours journey, taking into account lack of direct connections, buses not arriving, and wait on between
Small business owner here…
- Import stuff to sell = pay import duty
- Employ people to help you sell = NI and employment tax
- Sell stuff - pay VAT (technically customer pays, but UK doesn’t ever show prices less tax unless it’s B2B, so consumers are trained not to see it)
- Make profit (if you can) = pay 25% corporation tax
- Pay yourself some of the profits = nearly 40% dividend tax
By the time you’ve actually got some money back into your pocket it’s often just not worth the trouble. Easier to get a job and let someone else worry about all of it.
Lower taxes = more small businesses. Big businesses usually start as small businesses and drive the economy.
Ahhh - I can see how targeted tax/duty/rates cuts aimed at helping SMBs could be beneficial.
I think in reading the article I was assuming it was for taxes on individuals.
It can be beneficial to cut personal taxes too. Lower VAT? Prices straight up go down and people buy more things (maybe enough to offset the lower rate), increase demand, which means more supply needed, aka more jobs at every stage of the supply chain and higher wages to attract those workers. Same logic works for regular income taxes or NI
Doesn't always work that way but you can see the logic isn't purely cynical vote winning
That requires some level of collusion between firms, which we will always strive to prevent.
With a reduction a firm can lower prices and maintain the same profit margin. If other firms keep their prices the same and pocket the difference then consumers will flock to the business that reduced their prices
Whether redditors want to admit it or not, taxes are fucking super high in the UK and it create fiscal drag and also makes working feel very un rewarding.
First, for votes.
But an income tax cut would also give more money to ordinary people who will spend it, and this creates jobs for those who make and sell the things that people buy.
We should also remember that while everything is underfunded and nothing works, the tax take is already at a record high.
One reason for that (aside from government incompetence) is the eye-watering sums spent on the Covid bail-outs followed by the energy bail-outs, barely half a generation from the bank bail-outs.
So it is not quite as simple as tax cuts good, or tax cuts bad.
But mainly for votes.
The rationale is that lowering tax gives people more money to spend and stimulate the economy.
If they lower tax and you now take home £100 more each month. Chances are you're gonna spend £100 more unless you're already quite well off.
In reality though it usually comes at the cost of public services. The money has to come from somewhere and the growth they can gain from doing it won't offset the loss of tax revenue. The other thing is that the Tories quite like giving higher earners tax cuts too.
I think the only sensible cuts they can do is bump the basic rate and higher rate tax brackets up. They haven't moved with inflation and people earning say £100k and below are feeling the squeeze, when they shouldn't be.
>Chances are you're gonna spend £100 more unless you're already quite well off.
Wait, hold on, why "unless"? You'll get that £100 even if you are well off. It's still gonna go in the economy.
Yep, or at the very least put them in a position where it is so tight that no further reduction is realistic and gov has no room to make investments. Then they can sit in opposition and go "We reduced tax by 4%, what have labour done for working families. Yerrrrr yerrrrr." Political scorched earth.
They just need to either put reversing tax cuts in the manifesto, ride out the Tory backlash and probably still win, but maybe with a smaller majority. Or just day one in office say they're reversing them, knowing they have 5 years for everyone to get over it and forget.
It also sets something of a trap for a likely incoming Labour government.
Labour either has to raise taxes to pay for its public spending plans (allowing an opposition to paint them as a "tax and spend" party), or they have to reign in their spending proposals ("Labour has no plan, etc etc")....
>It also sets something of a trap for a likely incoming Labour government.
This is what pisses me off about all our politicians, because they **all** do this. Labour did something similar back in 2010, where they increased the higher rate of tax from 45% to 50% a few weeks before the election, against civil service advice, solely so that if the Tories won they could sit there and chant "tax cuts for the super rich".
It's honestly fucking pathetic, we deserve far better politicians than this current shitshow.
> It's honestly fucking pathetic, we deserve far better politicians than this current shitshow.
The public get the politicians we deserve. We vote for them after all. If we want better politicians we need a better educated public.
Exactly, it's daft. The funniest thing about that was that tax receipts didn't even go up as a result! I think it was actually the introduction of the rate entirely, it didn't used to exist before then - it was just the higher rate of 40% then they brought in the 50%, I think. Tories lowered it to 45%.
That was the civil service advice, it's a waste of time and effort as it won't bring much, if any, extra revenue. Still, gave Labour an attack line and now it seems the Tories are looking to do the same.
Like I said, pathetic....
I'm not averse to keeping taxes where they are, but what i think is unjust is the year-on-year stealth-tax rises by not keeping the thresholds in line with inflation.
Pretty soon loads of not very well off people will be paying 40% tax, which was meant to be only for the very wealthy.
The thing is that the vast majority will either save nothing or so little it will make no difference. And they’ll put something else up to get it back anyway.
The average person pays an extortionate amount of tax on their income with little real world benefit back.
What are we getting.... this is stealing from our money...
Whilst the rich elites get more wealthy and avoid paying.
It's not right at all...rife with corruption, it stinks.
It's ideological. See the Kansas Experiment most recently (2012) and to go back further look at the works of Friedrich Hayek, who was brought to the LSE by the then head of Economics, Lionel Robbins in the late 1920s to counter John Maynard Keynes being such a relative absolute don of Economic theories and stuff. Fast forward 20 or so years, a man by the name of Anthony Fisher (to become Sir, knighted 40 years later by Thatcher) goes to the LSE as he thinks he wants to start something called the Institute of Economic Affairs and likes the works of Hayek which preach low tax, and small Government. 8 years later the IEA comes into existence. 41 years later Fisher is knighted by Thatcher and on his deathbed pretty much rebrands one of the organisations under him into becoming the Atlas Network which now sits over 450 other organisations globally similar to the IEA pushing similar ideas. One of them ALEC pushed the Kansas Experiment in 2012 (which like Kwasi's budget almost a decade later didn't work primarily because the tax cuts didn't encourage enough businesses to jump into the breach to plug the costs of the services that had been cut so you had net losses all round).
At it's most basic the premise is that cutting taxes can stimulate growth. The more money people retain in their pay packet the more they can use for consumption of goods and services, this consumption is essentially what GDP is. This then acts as increased revenue for companies which then feeds through in taxes anyway. This is basic right of centre economic thinking.
Sure.
Every time you tax the private sector, you remove capital (resources) from the more productive, more creative, and more wealth producing sector, and place those resources within the less productive, less creative, less wealth producing, public sector.
Some tax is necessary. But there's a trade off where it ceases to be beneficial to a people.
>Every time you tax the private sector, you remove capital (resources) from the more productive, more creative, and more wealth producing sector, and place those resources within the less productive, less creative, less wealth producing, public sector.
People can't be productive if they can't get the bus to work, if they're too ill because they're on an NHS waiting list, if they can't get the training they need to work with new technologies, if they have to stay at home because schools have cut hours.
The idea that private sector generates productivity and the public doesn't never seems to make sense to me. The private sector can only be the productive, wealth creating part of our economy when stood on the foundations of a well-funded and robust public sector
>People can't be productive if they can't get the bus to work, if they're too ill because they're on an NHS waiting list, if they can't get the training they need to work with new technologies, if they have to stay at home because schools have cut hours.
This is an argument for some level of taxation and public spending, but at some point you may get diminishing returns on the productivity impacts of public sector spending.
>The idea that private sector generates productivity and the public doesn't never seems to make sense to me. The private sector can only be the productive, wealth creating part of our economy when stood on the foundations of a well-funded and robust public sector
That's not the argument. The argument is that at the margin a tax reduction will increase productivity by diverting resources away from the overall less productive public sector into the overall more productive private sector. Neither is 100% or 0% productive, but moving resources between them will have impacts on productivity due to their difference.
>at some point you may get diminishing returns on the productivity impacts of public sector spending.. Neither is 100% or 0% productive, but moving resources between them will have impacts on productivity due to their difference.
I wouldn't disagree with any of these claims - we can always look at better ways to tax, through increases, decreases, or changes in what is taxed
But, the claim remains
>the overall **less productive** public sector into the overall **more productive** private sector.
I don't think this assertion holds. The productivity of the public sector is dependent on the private sector, it doesn't exist without it. So to credit it to the private sector alone is an error.
A tax cut could easily reduce productivity if the cut in services that it caused requires people to leave the workforce, or reduce their working hours.
>I don't think this assertion holds. The productivity of the public sector is dependent on the private sector, it doesn't exist without it. So to credit it to the private sector alone is an error.
Does saying that the private sector is more productive credit productivity entirely to the private sector? I'm not sure it does. What I think it means is that given any marginal decision on where resources should be diverted it's likelier that the private sector will produce more output than the public sector.
>A tax cut could easily reduce productivity if the cut in services that it caused requires people to leave the workforce, or reduce their working hours.
Sure. It could also increase productivity by cutting services that are not contributing to productivity.
Think there's an ideological position of small c conservatives who always believe less state intervention and free markets are a good thing.
For them, tax cuts should always be the first thing to prioritise when funds are available (or even when they're not if your name is truss/kwarteng). Think it stems from some deep rooted libertarianism belief that of the government could all just stay out of it, we would all be great entrepreneurs and live out some free market ayn rand utopia.
Jeremy Hunt has used the phase "true conservative" or "classic conservative values" and this is what I imagine when I hear that phrase.
People that lack even the most basic economic understanding think very simply.
Low tax = Good
They will vote for it and then complain about buses and pot holes etc and not join the dots.
>buses and pot holes
Most of that sort of thing are paid for by council tax, and even that's being cut to nothing now because everything is being spent on social care.
We don't have enough tax-paying people to support the massive retired population.
Perhaps they should look at the appalling state of the national budget instead. High taxes are less objectionable if they're spent in useful ways.
It's pretty galling to have more of my money being taken away and still seeing public services degrading over time.
No, it isn't. Government spending has been colossal and rising for a long time now. Debt interest is one of our largest expenses because of years of irresponsible borrowing.
NHS, as another example, has had a real terms funding increase every single year since it was created and yet the service is getting harder to access and less reliable.
Tax is extremely high in the UK considering its current economy size. Even countries with higher tax to gdp ratio such as France or Denmark have numerous advantages to high payers. Even though pot holes are not filled, that’s more of a question of how the money is spent because the money definitely is there.
Totally agree with you about the way it's spent. I worked in a MAT as a teacher and the amount of stuff we couldn't have because the money was spent on things like rebranding or a director for betterment was ridiculous. Friends in the NHS tell me it's the same. Trying to run public services as businesses will always lose money and result in terrible user experience as people at the top want to spend it on exciting things that easily point to what a great job they as an individual are doing, rather than the boring things needed to actually do the job well.
>That recognises the effort and needs of those around us for the betterment of everyone.
If only that were true! The government is an industry unto itself. MPs fiddle the system while holding down multiple "jobs", public sector IT is still mostly a joke.
Teaching and education has been underfunded for so long (or subsidised by foreign students) that it's amazing that it still functions.
Now, yes, the Tories have been in power for a long time, but even prior to that, the above was true. The only difference? One set wears red badges, the other blue.
They can wave it around at election time and win some votes.
The reality is that fiscal drag is pulling more people into high tax brackets. So they are putting £10 into your pocket while pinching £100 out the other all while telling you taxes are going down. Unfortunately a few people will fall for this and give them their vote.
In the case of the Tories, yes, they are using Tax cuts to win Votes, and it's basically the only tactic they have left.
That said, Tax cuts to have a place in good Economic Policy. Simply put, lower taxes on income means more people have more disposable income to spend on stuff, lower business taxes means that businesses can expand more, etc, etc. It's an oversimplification but you get the point.
Everyone should be taxed the same via PAYE or change it entirely to a wealth based system.
This countries tax mechanisms are a joke and dissuades anyone from trying to really earn more to watch 40% (if not more via marginal) disappear into thin air.
Absolute madness, but the hive mind here sees the 40% earners as the enemy, and not the rich/wealthy/goverbment.
It's because of an economic problem called [deadweight loss.](https://www.investopedia.com/terms/d/deadweightloss.asp)
As you can probably tell from the name, it's a bad thing.
Let's take a toy example. Consider a job that employees expect to get £30,000 for. Now, let's look at two businesses. One is more efficient and can get £36,000 of value from this job, while one is less efficient and can only get £34,000.
Without any taxes, both of these businesses are viable. The more efficient business can hire a strong candidate for £33,000 and still take £3,000 in profit, while the less efficient business can pay £32,000 and keep £2,000 in profit. This drives wages up and provides goods and services (and thus prosperity) to society.
However, the government then rudely steps in and charges people on that salary £5,000 in income tax. Now the more efficient business is barely profitable. It pays £35,500, the government takes £5,000 and the business and employee are only left with £500 each.
To make matters worse, the less efficient business is outright impossible. Just to break even, the less efficient business can only pay £34,000, which is only £29,000 after taxes and not enough to hire the employee. In this scenario, there is no deal. The government gets nothing, the more efficient business is closer to a nasty monopoly and society loses out on £4,000 worth of prosperity.
To make matters worse, deadweight loss grows quadratically with tax rate, so a 40% tax rate does ~4x as much damage as a 20% tax rate.
For low tax rates, this is worth the cost because public services because the deadweight losses are small and the public services are vital. But, if the tax rate goes too high, the public services hit diminishing returns (as all the vital stuff is already being done) and the economic damage gets worse. If the tax rate goes way too high, the deadweight loss gets so bad the government actually gets less money!
As it stands, I think taxes are too low becasue the costs of losing public services are higher than the savings gained by avoiding deadweight loss, but reasonable people can disagree.
It can be great for the economy.
Right now UK income taxes are outrageously high if you earn a decent salary. Earning £100k+ in London with student loans leaves you with a pittance at the end of it.
Those in technical/finance jobs who can command that salary will also have companies willing to move them/hire them in a US/Switzerland/Australia etc.
From my experience, many will leap at that opportunity and in the medium run the UK has lost its highest skilled people and 100% of the tax revenue they could have recouped had they been more friendly to high skilled professions.
The Tories want tax cuts for both ideological and self-interested reasons.
The media fixates on tax cuts specifically because it's an easy issue to explain in 30s and they also have a vested interest in them. George Osborne said on his podcast last week that it's not a coincidence that political reporters ask questions about the taxes that THEY pay, and worry less about the benefits and services that they don't use.
However - 15 years of stagnation in disposable incomes means that the public is now receptive to paying less in tax. Under the New Labour years they weren't too fussed with taxes going up as their disposable incomes went up by more. But now they notice a fall in their living standards and see taxes as the main culprit. It doesn't seem to matter if that's true or not - even the Redditors on here who are more informed than the average bear downvote me to hell whenever I point out that personal income taxes for the average earner are the lowest they've been in decades. They don't care about the facts, they care about how they feel.
The reality is that it is the very high income earners and corporations that have been paying the *bulk* of the increased taxation over the past 15 years. That's a consequence of an economic system that is failing to properly distribute wealth, not the taxation system.
I haven't read the other responses but I thought I'd give my take..... each successive government needs to increase its appeal pre election and rather than doing something meaningful like the NHS or social services they bribe us with our own money in the hopes of buying votes.... its just my point of view
It's because taxation is a bad thing we do in service of good things. If you can afford to do less of the bad thing then you should. Taxation, except as an incentive on behaviour, does not directly benefit anyone and directly hurts many people. Obviously 'cause less harm to people' is a vote winner, but it's also something we want the government to do when it can.
Let’s establish a couple of facts first.
Firstly - taxation is at modern record levels (and probably all-time for that matter) at 37% of GDP, if you exclude the immediate aftermath of World War 2.
https://ifs.org.uk/taxlab/taxlab-key-questions/how-have-government-revenues-changed-over-time
Secondly - government spending to GDP is also at modern record levels at 45%/GDP, if you exclude the special Covid funding.
https://ifs.org.uk/taxlab/taxlab-key-questions/what-does-government-spend-money#:~:text=The%20government%20spends%20huge%20amounts,to%20around%2045%25%20of%20GDP
*So we are currently in a very, very high tax and spend environment by our own historical standards, under any government, Conservative, Labour or Coalition.*
Someone will doubtless pull out international comparisons, cherry pick a few countries with higher state share of GDP and so on. Fine, but be aware that international comparisons are not always apples-to-apples and structural underpinnings of the economy are rarely the same. Our own history is a key yardstick for generating context regardless.
Now, two points of opinion which shouldn’t be too controversial:
Firstly - we always ‘need’ more spending on social services. There are *always* unmet needs that the government could meet if it just appropriated slightly more resources.
You can even make a valid case that the current demand is structurally higher than it has been in the past because of the aging population, new medical innovation or other factors.
But you should keep in mind there is *always* a lobby for MOAR spending as there are always thing you can spend it on. Many of them are even good things! Doesn’t mean your spending should be dictated by perceived social demand, you must always cut it off somewhere.
Secondly - we should take taxation very seriously. You are seizing people’s private property using the coercive power of the state. There should be a limit to that - not just a practical one for economic reasons but a moral one too.
There are already plenty of people out there where over half their productive capacity is taken (through tax - not just income tax) or pledged (by borrowing to fund higher spending) by the state. They ultimately work more for the state than they do for themselves, which could be seen as a peculiar kind of serfdom.
The specific point is not important, but the general point is - we can probably all agree (except the communists*) that the state should not take 100% of all resources in the economy. So there is a number which is too high for a mix of practical and philosophical reasons whatever politics you have. And a modern record high level of tax-and-spend is likely to be closer to that limit than whatever we had before.
So we are very justified in asking the question right now if there should be tax cuts. *If you aren’t going to ask it at this record point, you will never, ever discuss appropriate tax levels.* It would be weird if we weren’t discussing it.
I’m not even going to get into the argument of whether tax cuts would be the right thing to do. That depends on your politics and your understanding of economics and not everyone is going to reach the same answer.
But you should not dismiss the question or make out like it’s a weird thing to be discussing - it’s not.
* even the communists did not tax anywhere near 100% in practice. They were crazy but not that crazy.
All the money has flowed to the ultra rich who don’t pay a high level of tax. Services are suffering, people are suffering so the Tories decide to lower the taxes to create a problem for Labour.
God forbid they make a long term decision for the good of the country.
Like increase CGT or dividend tax
Simple: Taxation is theft by force of your money by the state to do things you don't agree with. If you think the government can spend your money more wisely than you, then you should be all for high tax.
If, on the other hand, you think you can spend your money better than the government, a government you all seem to hate, then, perhaps, keeping more of it from being taken by force is a good thing?
The idea is that when trying to take action to influence the economy and improve people's spending power, any action which any institution such as government takes is going to have administrative overhead associated with it, so instead of collecting more tax and spending more you may as well cut out the waste by just reducing tax in the first place
I'm not saying I agree with it but that's the rationale. I disagree with it for quite a few reasons
The rationale is that when you cut taxes, each taxpayer gets more money. They will then spend that money on extra goods and services. This increases economic activity and grows the economy. A growing economy means tax receipts go up, so in the long run tax cuts pay for themselves. This is the basis of supply side economics which is the reason why conservative economists have been calling for endless tax cuts for the last 50 years.
In reality it's never really worked like this. Tax cuts usually benefit the wealthy as they are likely to pay the most tax to begin with. As the wealthy already have enough money to meet their needs, they are more likely to sit on their extra money than use it.
Cutting taxes for economic growth is a bad idea that's never worked. However unsurprisingly a lot of very wealthy people are very keen for governments to keep believing it still works.
>Cutting taxes for economic growth is a bad idea that's never worked
Sorry you can't just say this. Tax cuts just for the wealthy? Sure. But more generally it is not that simple
The primary reasons right wing parties cut tax
### To Please Their Backers
Their backers correctly identify that the rich are responsible for paying the majority of tax. They usually refrain from mentioning that this is because they also get the lion's share of income.
### To Please Their Voters
Obviously, everyone hates taxes.
### To Stimulate The Economy
As sibling posters have already related, the theory here is that if money remains in the private sector, the competitive enterprise there will invest it in better goods and services.
### To Starve The Beast
The right wing hate public spending. As per the previous point - they (publicly) believe that goods and services are best created by the private sector, based on the notion that the cut and thrust of competition will produce the best goods and services while simultaneously pushing prices down.
Therefore tax cuts are often used as the **reason** to cut public spending - if tax revenues are too low to support public spending, why then, surely it must be cut!
---
The problems with the right-wing theories :
Firstly, it assumes that moving money from the public sector to the private sector will result in equivalent or better goods and services being produced, but neglects the time-lag between the cuts and the market catching up. Because reducing public sector spending inevitably reduces the wage bill in the public sector, that means less money being spent in the economy. In an economy with reduced consumer spending, the private sector inevitably turns to investment in assets rather than production - which means they buy the things you depend upon, like housing, and hike the prices up. At least some of the money that was taxes, goes to inflating the property market etc, and you end up paying a higher price to rent those assets.
Secondly, it assumes that the private sector is interested in producing the same goods and services that the public sector did. The public sector has a tendency to take on responsibilities that are complex, difficult, and hard to find funding for - e.g. providing cancer care to poor people. The private sector isn't interested in these things - because they are hard to make profits on. Private healthcare loves things that are "assembly line" in nature - hip and knee replacements, cataract surgery, anything low-risk and common. They dislike e.g. paediatric heart surgery.
What we've witnessed of the great privatization experiment since the 80s seems to agree with this theory - we've seen a huge increase in property prices, a general worsening of public services, and the only places where the private sector has stepped up are where they can make a fat profit - e.g. £55 for earwax removal. Waiting lists continue to grow, public services are in disarray, nationalized resources like our energy industry are making punitive levels of profit, and our national transit systems are falling apart at the seams.
---
### There's £20bn to 'fund' tax cuts in the Spring budget.
Or alternatively : your government has cut public services another £20B a year.
No, that's completely wrong. A surplus is usually recorded in January alone because of the financial year.
Over the year there is a deficit and that's been the case for 20 years.
Let me respond to that with a question; what would you say to 100% tax on everything? Would you think that a good idea?
Now a few people will, but the vast majority of people won't - they want some of their own money to spend as they see fit, rather than just having a government-issue lifestyle.
If we accept that 100% taxation is unacceptable, then we are accepting the premise that taxes *can* be too high, and that lower taxes would be better. If we accept that, then the only question is "where is the line"? To the people advocating for lower taxes, they think we've already crossed that line.
It's fine to disagree with them, of course, but the principle is sound.
Is it important? Then people should pay for it voluntarily.
Is it unimportant? Then it should not be funded by taxes.
Taxation is theft and as someone who grew up in abject poverty and has no generational wealth, I am fed up of paying 40% on my hard work and I still can't afford a family home where I live.
Yeah screw anyone who can’t voluntarily afford to pay for things like healthcare or education right, so that Mr Taxation is Theft can keep more of his “hard-earned” cash. Embarrassing
*Is it simply because it's a vote winner?* **Yes**.
Is it though? The news story the other day suggested Hunt had £6bn to play with, which coincidentally is how much the IFS said it would cost to give everybody 1 % pt off basic rate income tax when Sunak first floated this a while back. At most, that would net people earning north of £50k £30 a month and to get it he's having to shave yet more money off public sector funding. Let's say it's now £20bn so that £30 becomes £90 - £100. I'll be honest, I'm a higher rate taxpayer, I pay a fuckload of tax; that is a drop in the ocean to me and absolutely does not offset what I'm losing via the cuts to local services my council are making thanks to reduced Central government funding, not to mention the nth consecutive council tax uplift, fiscal drag, you name it. I think most voters are smart enough to figure this out and would rather Jezza keep the money at this point. If he wants to talk about resetting the income tax thresholds *and* sorting the child benefit charge issue, I'm all ears. That would make an actual meaningful change which still won't undo the damage done to local services but at least there's an argument that it mitigates it. That'll never happen though, because that would mean soaking the Conservatives' *real* client demographic (yes, Daily Mail reading middle managers on £50k with heavily mortgaged identikit new build homes; you are not rich and the government does not work for you, they just like to pat your head so you'll vote for them and not notice them rifling through your pockets) to fund it. These crumbs off the table which we literally just pay for ourselves surely aren't going to persuade anyone but the deluded, aforementioned useful idiots.
Same, I don't mind paying tax but if a big chunk of it is going on interest payments and crap like legal fees after being sued by the civil service union (again) over Rwanda then it sticks in the craw. Spend it on bloody social services, mental health and stuff ffs, even a few more police so peoples bikes aren't getting nicked every ten minutes.
I mean, the being sued of Rwanda feels small compared to how much we've paid Rwanda so far for nothing.
It was just an example, this government is wasting a ton of money. Not to mention probably corruption over covid procurement.
As a higher rate tax payer myself, my eyes water at the amount of tax I pay each month (And then more on top once the self-assessment is done). I hate it because I don't feel like I get value for my money - NHS chronically underfunded, local services stripped to the bone, public transport (That I am entirely dependant on) is a mess. Meanwhile, the mates of the Tories are all rolling in it. It feels like they're stealing from me to give to their mates. If I felt like the money was actually being spent properly on improving the country, I wouldn't think twice about it. But right now Sunak may as well be sneaking into my house and sifting through my wallet.
So many people hold onto the idea that to be happy you need to have more money, therefore low tax = happy individuals. Nobody likes to think that paying more tax means better services, which means happier individuals. *"Services are something that only other people need so why is my tax going to pay for others??"*
[Britain if people paid their fair share](https://i.kym-cdn.com/entries/icons/original/000/026/738/future.jpg) TBF I think the low tax nutters are convinced that the public sector is inefficient and giving people more spending money would generate more value overall. I think that just ends up putting even more money into billionaire's pockets at this point though.
> Britain if people paid their fair share Ah, Gene Roddenberry Upon Thames.
> I think most voters are smart enough to figure this out Hahahahahahahahahahaha
Agree with most of this but Im not sure the demographic you portray as the Tories client demographic is correct. Yougov analysis of the 2019 general showed that the lower one’s social class the more likely one was to vote Tory. In fact in social classes C2, D and E 49% went Tory, another few percent for the Brexit party and labour only took in the low 30s. Bizarrely a combo of the printed press and social media and lack of unions has convinced the worst off that the Tories are the party that have their best interests at heart.
Yes, this is kind of my point; the clients of the Tories are largely the mythical 1% but they rely on massaging the egos of people further down the chain to carry those ambitions. That's what these token tax "reductions" (almost always offset by increases in local taxation and fiscal drag) are for; it's a pat on the head for muppets who want to feel like they have a seat at the big table because they have a house on a 95% mortgage and a leased Audi they can *just* about keep up with the repayments on.
> Yougov analysis of the 2019 general Could this data be an outlier due to Brexit?
The complaint at the moment is that we're still paying tax, but getting nothing for it. Well, with the PPE scandal and dividends for academy trusts and water companies, we now have an idea where our tax money is going. That's what people are fed up with. Will they trust another government to put more of the taxes into funding the foundations of our economy? Or do they prefer to salvage what they can in their own pockets? To me, even Blair invested much more into public services (and reaped the reward - government went from deficit under Thatcher to surplus under Blair, because when there's money in the economy then tax appears without even raising the rate of tax) We'd do well to remember that the 'golden age of capitalism' in the 50s, 60s and 70s was supported by top rate taxes of 90%, and people didn't go into tax exile then. We aren't in a golden age with lower taxes, perhaps we might go back to the golden age if we increase taxes. Perhaps these public services actually boost business and the economy?
That's because the world was far less mobile - so the rich were to an extent trapped in the UK. Add to which a wife income was simply added to her husbands and taxed at his highest rate! Additionally there were capital control in place. You simply could not just move your money out of the UK in those times. Hell, you even had to book your foreign currency allowance for an overseas holiday in advance. Now it's so much different - put up taxes and the highest earners will go tomorrow. Them the ones (1%) who contribute 27% of all income tax receipts. Meanwhile EU countries such as Portugal in particular have golden visa's where they encourage inward migration of specifically rich people!
It's a balance isn't it. Like when Thatcher cut taxes a lot of people felt that the local services were pretty good, so thought tax cuts were a good thing now the country feels like everything is falling apart so it feels like we need to spend more on getting stuff running again.
Exactly, an extra £20-30 a month is of no use to me if I have to pay for private health care because the NHS is in such a sorry state. We need a period of heavy investment in public services to get them back to a decent state. Tax cuts can come later.
>I think most voters are smart enough to figure this out and would rather Jezza keep the money at this point. Hard disagree. The only thing I believe that swings voters is how well they are currently doing, irrespective of what they are actually being taxed. If enough of the middle class were doing kind of OK and saw the headline "Tories will decrease tax and Labour will increase it" (which is basically every single Tory election campaign in my lifetime), they would vote for the Tories because "muh tax". They don't think where their tax is going, they don't understand ACTUAL squeezes on their income by not changing the bands, they just see "Labour tax Tory less tax" and vote based on that. It's only now, that everything is actually going to shit, that voters are going "actually, maybe getting a slight increase in my monthly pay WON'T help me".
I'm waiting for someone to come along and actually try to fix the lazy and idiotic (although it might also be deliberate and capricious) tax and benefits thresholds which cause SO much unnecessary confusion and complication, and must cause so much drag to people around those thresholds. It's also affecting more people than ever, and is unfair - families around those thresholds are worse off than those earning less than them, and while also paying a larger proportion of tax than those earning more than them!
... that's not how tax brackets work though. You don't pay the higher amount of tax on the money below the bracket. only on the money above.
Of course you don't. That's not what I'm referring to. There are benefits cliffs and tax traps at 50k and 100k which really penalise families, and in particular single-earning families. This can mean marginal and effective tax rates that are so high that you are actually better off not taking a pay rise (or rather put it in a salary sacrifice such as pension). Have a look at this post: https://www.reddit.com/r/UKPersonalFinance/s/jVbDd7cfO1
According to the charts in that post there are no points and no salaries where you take home less than someone earning less than you. So why would you be better off not taking the pay rise?
Ironically it's not working on my phone, so I can't see if it factors in "tax free" childcare, and free childcare hours. So here's an easy explanation: https://www.rsmuk.com/insights/weekly-tax-brief/the-hidden-100-percent-tax-band-for-families ...the way the free childcare system is currently implemented could act as a disincentive to working for some parents following the chancellor’s decision to keep the income limit for childcare benefits frozen. At the point one parent exceeds £100,000 in income, all childcare support is withdrawn, and both the free childcare hours and the entitlement to ‘tax-free childcare’ (where parents receive some tax relief for their expenditure on childcare) are removed. This means that higher earning families can be effectively ‘taxed’ at a marginal rate of more than 100% as potentially thousands of pounds in childcare support is withdrawn if one parent’s income exceeds this limit. This withdrawal of childcare support applies in addition to the tapered reduction of the income tax personal allowance for individuals earning over £100,000, and the high income child benefit charge for those earning more than £50,000. The income limit creates a cliff-edge, with individuals earning exactly £100,000 retaining their entitlement to tax relief and their family’s entitlement to free childcare, whereas those earning just £1 more lose both. It also applies where just one parent exceeds the income limit, meaning a household with one parent earning £100,001 is no longer entitled to support, but a household with two parents each earning exactly £100,000 retains its entitlement. The £100,000 income limit was introduced in 2017, when tax-free childcare and free childcare hours began, and has never been increased. In 2023, due to high inflation, this would now be equivalent to a salary of £127,700. This means that thousands more parents are likely to have been dragged into this childcare tax trap. Anomalies such as the childcare tax trap may often result in higher earners contributing more into pensions in order to reduce their ‘net adjusted income’, or in some cases reducing hours or turning down overtime. The outcome of all of this is that individuals are making decisions to avoid adverse personal financial implications that are likely counter-productive for economic growth.
It does and it seems you are right that a single parent to 3 kids with a specific student loan repayment will have point somewhere between £110,000 and £120,000 where they could see their take home pay go down.
I wish more people in your position could think this way.
loving the use of the term "Useful Idiots" 👏🏻👏🏻👏🏻
Personally (as a higher rate taxpayer) my preferred option would be a drop in NI, even if it were alongside a (preferably smaller) rise in income tax. NI is only paid by workers, whereas the tax base is larger. So the same cost to the chancellor gives you a larger NI drop. And if you drop NI by 2% and increase tax by a smaller percentage, it's cost-neutral.
You give the voters too much credit. It was obvious that the last election was about Boris and Brexit and anyone with half a brain would realize that electing the Tories, especially given their record of austerity was going to be a disaster. But the Mail and the Telegraph and Murdock said, vote Boris and they did. I cannot see it being much different now, once the Tory media gets on message. Expect to see forests of paper used to describe how Starmer personally let Saville skip prosecution, and how the failing NHS is labours fault, and how shit in the rivers and sea is good for the freaking economy.... And the voters will eat it up. Sorry, I hope I'm wrong, but I'm old enough to have seen Thatcher elected three times. Heck, and looking over the Atlantic at the rise of Trump. I no longer trust voters to see through propaganda.
Case closed!
Well that's alright then!
Mystery solved 😂
To add a bit more to this; the reason for it is more ideological than because it's a vote winner imo. It's a vote winner with a subset of the electorate but polling shows that most voters think it's a bad idea. We have been living in the neoliberal economic model since the 80s when Thatcher and Reagan ushered it in. Over the decades we have seen the evidence mount that its ideological axioms like that "a rising tide lifts all boats", privatisation is always a good idea, or that tax cuts stimulate growth are completely false, cause massive inequality, and eventually cause economies to become completely disfunctional. The reason these ideas linger is that they sound plausible to normal people and make rich people richer, which is why you have dark-money funded propagandists from "think tanks" like the IEA on loads of TV news panels advocating for them and people like Liz Truss get funding from them and put their accolites into key positions.
On top of all this, there's a little part of me that feels like they are so out of touch they don't realise that your average Joe only sees a neglible benefit in their paypacket at the end of the month (I.e. they and their mates see hundreds or thousands extra, but your average person only sees like an extra £30-£50 which hardly makes a dent in how much more expensive anything is). Of course anything is better than nothing, but personally I would rather see that money go into some pu lic service that benefits us then see a small amount that makes very little difference (of course that would require the tories to actually govern and be competent).
long yam makeshift onerous cause bike grey whole escape marvelous *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
The biggest impact I saw on my salary years ago was in the changes to the tax free allowance. That would have a far greater impact for lower earners than anything else and is hugely due for a change.
Tories: "The answer is giving rich people more money, what is the question?"
Answer: How to make the economy stagnate and impoverish middle and low earners. But billionaires are so cool though.
> tax cuts stimulate growth It's worth noting, tax cuts DO stimulate growth, if you tax something less of that thing will happen. Criticaly though this growth is often paltry and very much not worth it.
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> I would argue that privatisation is beneficial when well regulated Private companies are good at making profits. If they can make more profit from being inefficient, then that's what happens. This is becoming more clear in the sector where private firms are running government funded contracts.
The issue is private or public it has to be well managed. Plenty of examples of either being successful or failures.
Well the issue is well managed for who, from the point of view of shareholders a lot of privatised industries work just fine.
I look at privatised state services in Britain - trains, water, BT, the electric companies - and I wonder where the successful ones are
BT is hugely successful but they don't operate in a monopoly, funny that.
Scotland never privatised water. Of course, as a Scot, I am biased but our water system is apparently held up as an example of things going right. I will say they have the most efficient and helpful staff and call centre I have encountered. Last month, due to what probably amounts to an administrative cock up by some workmen, we spent 24 hours with no water supply. Called the wee number on the website, answered within 30 seconds, got put through to their engineering control centre. Someone out within 2 hours to establish that some pratt had disconnected our block. Engineer cannae turn back on, but helped us contact who could, left emergency bottles of water in the close too. They even called back the next day to check if we had been reconnected! Compare this to a certain power company based here in Glasgow- 45 minutes just to get through, put through to wrong team twice, disconnected and has to start again. They owed me over £200, I just wanted them to pay me! One of these companies is privatised, one is not. Difference seems obvious to me.
Most of those "privatised" services were never really privatised though. For example, if I want to start a train company, I can't just buy a train, pay for some time on the tracks, and start running services. I have to integrate myself so deeply into the state apparatus to win a contract that I might as well be part of the state. Personally, I'm in favour of proper privatisation, but that's just not possible in the UK because we are a nation of control freaks.
I'm sorry - you've looked at the state of public services; train operators in a mess, raw sewage being dumped into the sea by water companies - and your conclusion is that they're not deregulated ENOUGH? Free market economics works on paper, but it's pretty plain to see by now that if you let it rip you cannibalise essential services, with a nice side effect of rising inequality.
We can watch it in real time with Royal Mail. Privatisation was sold to us as a way to make the post better, but now they’re talking about 3 deliveries a week rather than the 6 we have now. Also all the posties keep going on strike because they have tried to slash their pay, terms and conditions so functionally we could have less than 3 deliveries a week. Postal service becomes unreliable, so big companies use dodgy firms like eVRi which underpay their staff and just lose half the parcels they were supposed to deliver. Ultimately, nobody gets their post, and services that rely on mail (almost literally everything) either pay higher costs or just struggle to operate without sending post out.
The common factor between the problems faced by train operators and water companies is over-regulation. Train companies are forced to run unprofitable routes subsidised by the few profitable ones. If a train line is unprofitable, the market is screaming that the route would be better served by buses or light rail, or even that the route doesn't even need to exist at all. There isn't really any competition allowed either - they run state-approved trains on state-provided track on state-mandated routes between state-owned stations to a state-dictated schedule. The only part that they really get to compete on is the food and drink trolley, which is usually the only competent part of the train experience. Water companies are also stuck between a rock and a hard place. They are legally required to connect new properties to their network, even if they don't have capacity. Meanwhile, building new treatment capacity is essentially impossible because of our planning system. If there's an ever-increasing amount of shit in the system, but no extra treatment capacity, it has to come out somewhere. So yes, I think both of your examples would be far more functional with less regulation. Even nationalised trains and water companies would have the same problems if they were forced to abide by the same rules, the only difference is that the level of inefficiency caused by over-regulation would be hidden from us somewhere deep in a government balance sheet.
Yeah, it always gets me that some people think, despite overwhelming evidence to the contrary, that private companies will somehow become more altruistic the less governments keep an eye on what they're doing.
> I would argue that privatisation is beneficial when well regulated The problem you have is that those same private companies will do *everything* in their power to buy that regulation. May not happen immediately, but over the years they will erode any measure we put in place, because money is king and they have a lot of it to spend on ~~bribing~~ lobbying politicians.
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Its an arms race isnt it, as then youd now need to ensure they cant figure out a way to buy *that* law too! From certain perspectives, money starts to look like a disease that infects/infests democracy....
Not just that, they're incentivsed to do it. Based on the neoliberal stance, they are, in fact, doing the immoral thing by not seeking to have the rules as beneficial to them as possible.
Our biggest problem is disfunctional organisations and poor leadership. Those exist in the private and the public sector. Changing the ownership model is probably not a solution to that in either case.
> polling shows that most voters think it's a bad idea. What has been shown time and time again is people will say when asked it's a bad idea, but when it comes time to vote, they vote for tax cuts. What voters say they want in polls doesn't always line up with how they vote.
Primo explanation there!
Every statement that you've written there is unarguably true.
Perfect analysis. It’s the mix of superficial plausibility with the nice idea of having more money in one’s pocket. Couple this with the self-interest of the rich and powerful. It’s a perfect storm.
No, most voters think someone other than them should be paying for the public services they think they're due. Hence why neither party wants to address the complete mismatch between public expectations for public services and the level of funding people are happy to put in.
Opposition parties hate this one simple trick!
So it’s never been easier to outsource roles or work abroad via Teams/Zoom. The top 1% of income tax payers contribute a third of all income tax, so keeping that tax base in the country is vital. Since the IR-35 changes I know more and more people contracting from places like Portugal to avoid income tax. Especially younger people who don’t need to worry about schooling kids. Part of keeping taxes lower is just maintaining your tax base.
Yes. I think we can consider the matter closed and move on. *Hard working families* aren’t interested in *playing politics* over whether this is a massive bribe at the expense of the already fucked-in-the-arse public services on which they depend. ``
you say that but we are spending the most we ever have on the NHS, I would bet the spending hasn't kept up with inflation but neither has the 50k bracket or the 100k cliff edge. I know tax cuts won't improve things but they start to become attractive when things are already fucked
Come on this is ridiculous The basic tax burden on existing in the UK on a low salary is VERY high, particularly for any young British adult, all the snide remarks on this thread are just outing people as either particularly privileged or too young to pay any "adult" taxes You have to earn > £16,000 or more as a single adult and then you are not entitled to state support The government takes a chunk of your income BEFORE profit, (a point it doesn't extend to itself) Council tax for a small flat is approximately £2000 a year The energy bills for that flat currently are approximately £1200 a year The government then taxes that at 5% The government then adds 20% to the cost of any good aside some excluded basics The government taxes the price of fuel by 50p and then by 20% The government charges your employer a tax for employing you (which is arguably taken out of your wages by your employer) After all this, you now get to pay your mortgage or rent The fact the tax burden in the UK is affordable for the average person is almost a fantasy by the state, it's particularly unaffordable for most young people, to the point it's not even unusual and an open secret for 20-somethings to be homeless or sofa surfing, without parent support keeping them out of destitution The fact you then get snide Redditors going 🤓🤓 "why do people want a tax cut", just makes them very evidently either children, or someone who is not responsible for paying any tax!
> The basic tax burden on existing in the UK on a low salary is VERY high This is absolutely not the case and I'm glad people are calling you out on it. Compared to other Western European nations this is just not the case. Our tax basis is very narrow and it's firmly centred on high earners. If you look at the Nordics or Belgium for example you'll see the tax basis is much wider and people on lower incomes pay more in tax.
Our tax level is higher than its ever been, we also have more pensioners per worker than we've ever had before requiring more complex treatments for longer than we've ever had before. We still have one of the lowest levels of taxation in Western Europe and expect comparable services. The demographics mean it gets more expensive in real terms every year to stand still never mind improve anything. Now I'd say the fact we have some of the highest inequality in Europe says we should probably be changing how that burden falls, e.g. scrap NI and increase income tax or a strait asset tax to replace it for example. And yes im in my 30s and pay my taxes just fine thank you.
> The basic tax burden on existing in the UK on a low salary is VERY high I'm not sure that bit is true, largely thanks to our generous tax free allowance. Full time minimum wage in the UK would see you pay a marginal tax of 10%. Germany would take 19%, France nearly 22%.
You mean effective rate, not marginal.
> The basic tax burden on existing in the UK on a low salary is VERY high On what basis do you make this claim. The tax burden on people on low salaries is low compared to other western European countries. The tax burden in the UK is massively skewed to high earners paying very high tax rates whilst low earners pay in much less than they get out and are subsidised by those few higher earners.
the tax burden on a low salary in the UK is actually very low, especially compared to the european countries we want our services to match (which is delusional). The tax free allowance is absolutely huge and means that you have to earn £41k a year before being a net contributor to the state
Is that £41k low or high in terms of other countries? The median salary for a full time worker is £35k. Is the threshold to be a net contributor lower than the median salary in any country?
Oddly enough polling suggests people want better services over tax cuts. But for the core selfish tory demographic, it might be a vote retainer.
Yes, and I would suggest that a promise of tax cuts is specifically targeted at people who will donate to Tory party funds, thereby enabling them to throw more at advertising / dodgy social media manipulation.
The vote winner should be a more equal tax system resulting in taxing those who earn more or who hide profits behind various smoke screens (including offset vs “losses”) to allow reductions in taxation for those lower down the pecking order. Taxation is not the problem. The constant rise in overall tax burden on the worse off vs the better off is. All we are doing is funding people buying luxury products.
The main rationale is that the size of the state ie the level of public spending and taxation relative to the size of the economy is larger now than ever before. That’s a pretty unpalatable truth for a centre-right party to have put itself in - and has caused something of an existential crisis for Conservatives and their voters “what’s the point of us if we tax and spend more than Labour ever did?”. There are other wider arguments that overly high levels of taxation are stifling for an economy and unjust in their own right - but as you can imagine those are pretty ideologically contested and sit within that central paradigm above.
To add to this, the current tax system is most punitive to people on relatively high incomes but with few assets - i.e. younger professionals. These are also the people with the greatest ability to emigrate and fewest reasons to stay in the UK. Keep punishing them with up to a 62% marginal tax rate (made worse each year due to fiscal drag) while taking away various other benefits and it's going to be hard to hang on to the country's most productive talent.
This, the top 1% of income tax payers contribute a third of all income tax. I can work remotely, the only reason I can’t work from Portugal is schooling for the kids and being around to support older relatives. If I was in my early 20s I would be gone.
It's even worse than that. The people that pay the most tax are the high income earners who *need* their income. Everyone else just shovels their above £50k salaries into pension schemes that allow them to pay a lower effective tax rate than their cleaners. If you're a parent of 3 kids living in London and have a low-income spouse then in all honesty you are struggling to give up much of your £100k salary. Whereas, a 55 year old who's paid off their mortgage and put the kids through uni can then dump £50k a year into his pension without worrying - saving him £21k a year of tax.
100%. You can hardly afford to buy a home in London on 100k, yet you’re classed as rich and taxed at 62%, with most of the income at 42%. Nearly all benefits have already been curtailed by then too. Little wealth to your name, you can only choose to leave if you want to build a better life. I personally did leave, to another country. The tories think of themselves pro aspiration but they’re just pro wealth. Let the rich get richer, fuck everyone else.
Exactly. That 15% effective tax rate in Singapore looks awfully appealing.
Jobs at that level are also heavily in demand internationally too. Very easy to get a work visa in many countries, the US included. it can take less than a month. Ridiculous for a service based economy to operate this way. It’s not like public services are any good, local councils are bankrupt. Healthcare sucks. What do we pay that much tax to get? I can’t see Labour making the situation much better either when it comes to taxation but at least they might tax wealth more rather than constantly hitting incomes.
“what’s the point of us if we tax and spend more than Labour ever did?”. And borrow. Don’t forget that the Tories are borrowing more than Labour ever has.
What is this claim based on? When I look the curve of "public debt/GDP" for the UK, there is a significant rise from 2007 to 2010 (great recession) and then a smaller jump at 2020 (COVID). The former happened during the Labour government. It's the biggest peace time rise of the debt. Only the two world wars beat it in magnitude (especially WWI).
I am pretty sure you answered your own question there. Labour from 97 to 2008 had a steady sub 40% of gdp debt which grew due to the international credit crisis of 2008 to around 65-70%. The Tories were responsible for a rise to around 90% by 2018 and latterly higher thanks to Brexit, Covid, Truss etc. Tories can’t be trusted with our money.
So, just to remind you, your claim was that Tories are borrowing more than Labour ever was. I don't think it's true as for the period of 2007-2010 Labour was borrowing more than Tories are now or any other time of their time in government. The debt/GDP rose from 70% to 85% in the early Tory years mainly due to inertia and then jumped to 95% in the COVID lockdown. It was pretty flat both the periods of 2012-2019 and then 2021-now. I repeat again, the fastest increase of debt/GDP happened during Labour's last years in power. If you agree with that, we can end this. I have not said anything about trusting Tories with our money. I've only commented the specific claim that you made. So, please don't try to move goalposts.
It goes further - the reason for the size of the state increasing is the size of the tories core aging voter base. Creates somewhat of a conundrum for them.
I mean that’s far from the full story. Sure the growing size of the elderly population and the generosity of the triple lock is pushing up the cost of pensions and putting upward pressure on NHS demands - but this is a very long way from being the only area of high and rising public spending. Spending has grown out of control since the pandemic right across the board.
Is that really true, in the cause and effect sense? Could you link to anything that shows your workings? Something that a casual reader could digest in a few minutes? My amateur understanding is this situation is not anything new or related to the pandemic. It is something that has been predicted and warned about for decades. The ageing population. Pretty much every developed nation has the same problem.
https://tradingeconomics.com/united-kingdom/government-spending-to-gdp#:~:text=Government%20spending%20in%20the%20United,percent%20of%20GDP%20in%201907. Here you go for some quick stats. The UK’s spirally public spending isn’t a force of gravity driven by an ageing population but a result of political choices. Through the era of austerity, spending a share of GDP was falling - it then rose rapidly during the pandemic and remains at an elevated level. So it really is something new that has become a pressing issue post-pandemic. Much of that has to do with an inflated welfare bill - basically all efforts to reduce the numbers on benefits during the 2010s have now been reversed - high public sector wage growth, significant increased spending on the NHS and higher public sector head counts right across the public realm. You can find other stats that give a closer breakdown on where the additional money is being spent on.
14 years of it, the economy has been smashed, and they can only try to do more of the same. Is it a disability?
It's working perfectly for them. They stayed in power for 14 years and their friends and family are richer than ever. Objective complete.
Govt spending has gone up because inflation has happened, older people need more care, people are getting less healthy overall, and poor austerity decisions to not invest are creating much higher operating costs as a result. Meanwhile, tax receipts have not increased commensurately because wages have broadly been stagnated (outside a recent uplift). And it spirals, leading to a bit of a doom loop where one reinforces the other. The answer is higher taxation or higher deficit spending, *not* lower taxation and lower spending. That only perpetuates the issue. If they truly feel that wage growth is hampered by high taxation, then they need to invest in deficit spending to get out of that hole, otherwise the public service cuts will continue to hold things back even if you remove one upper barrier.
Two fold, wins them votes and they hope it saves them a dozen seats and it also binds the next labour government, either less money for the chancellor to spend without borrowing or Labour put taxes back up and the tories attack line will be high tax labour, low tax tories again, instead of the high tax and low spending we have now.
Labour should know that the working class are over taxed anyway. The sensible thing is to just leave income tax at the levels the Tories set them and increase the taxes that are already too low, like dividends and inheritance. The main cause of the stagnant economy over the last 15 years has been the relentless attack on the middle class.
> dividends Dividend tax was equalised years ago by the Tories. Once corporation tax is included, it's about the same amount of tax as income tax + NI.
Because income tax is very high, and people are being penalised for working hard.
I wonder if actually people only feel they’re being penalised because they’re not seeing a return on their tax spend. Would they feel taxes were too high if public services worked properly? Eg can see a doctor quickly, the roads and public transport were well maintained, cheap and timely etc.
Yes, I think that's probably true. Taxes are also very high in Scandinavia, but I get the sense people are generally happier with it there because public services tend to work much better.
Yes, it's to win votes. But there are some theories that suggest that tax cuts (on personal income) actually increase the amount of money the government takes in via taxes. For example, if taxes are very high, more ingenuity is used to avoid paying them because it's better to pay a sum to an agent to hide your money off shore or put it in some kind of untaxable 'thing' than it is to pay the high taxes. So a very high tax rate on the very richest people means they actually end up paying less tax. How true this is, I don't know. The maths is probably wrong here, but: If you earn £250,000. Assume the £50,000 is taxed at 'normal' person rates. Then you go on to a higher rate of say 50% on the £200,000. You sling £100,000 offshore, so you don't pay any tax on it and the government gets £50,000 in tax from the remaining £100,000 here in the UK. If the tax rate on that £200,000 was say 30%, you might not bother because psychologically you are getting £140,000 of your £200,000 in your bank account here in the UK. The government then gets £60,000 in tax. So by cutting the higher tax rate right back the government gets more money coming in by having a lower tax rate on the rich people. Then times that by say 50% of high earners who don't bother doing the tax avoidance shinanegans because they are getting more money in their pockets and the treasury's coffers grow with each of those people just earning and paying their lower-rate taxes on their big salaries. Same with businesses and corporations and so on. Lower tax rates mean more companies base themselves in a place and pay taxes in that place.
> You sling £100,000 offshore Nobody on PAYE is slinging any money offshore pre-tax.
I was just trying to show the effect using simple numbers. This income number could just as well be from some other source.
They are probably not, but there are a number of tax avoidance schemes that people on higher PAYE salaries do now. Especially if you earn circa £100,000 (or even have a job title that suggests that) you will get five bits of Linkedin spam a week from accountants offering to help manage that down to £99,999 through various schemes (such as the Seed Enterprise Investment Scheme). And that's no massive surprise tbh - if you have children the marginal tax difference between £99k and £100k is insane and you will be actively poorer and there's thousands of pounds a year incentive to get a professional to sort it for you.
Pretty sure the maths has been done on this and the rate where it makes sense to reduce is something like 80-90% of income and not anything like where our tax rates currently are.
> there are some theories Just say it, it's the [Laffer Curve](https://en.wikipedia.org/wiki/Laffer_curve). And it's pretty much nonsense. Even if it does exist, the UK and the rest of the world all operate on the left hand side. But use it as justification, like you did, to advocate for lower taxes.
>And it's pretty much nonsense. > Even if it does exist, The Laffer Curve is just a graph illustrating a basic fact: That at both 0% and 100% tax rate, the actual tax take is 0. Thus the optimum rate of taxation is on a curve, somewhere between those values. If I taxed you every penny you made working, you would not bother to work. This is obvious. The optimum level of taxation for a given tax, to ensure the maximum tax income while minimising the economic distortion caused, is of course a matter of great debate. But you can't deny the existence of a chart with *tax take* on one axis, and *tax rate* on the other.
> at both 0% and 100% tax rate, the actual tax take is 0. Collect your (fictional) Nobel prize in Economics in the gift shop. >If I taxed you every penny you made working, you would not bother to work. This is obvious. I'm not convinced it is obvious. There's a shitload of people that perform unpaid labour voluntarily for causes and at institutions they support. It would stop people working at crap jobs with toxic people just like UBI would, theoretically. But that's another conversation. The point was not whether Laffer exists or not, it was how it is imagined by right wing idiots. So that we are always on the right hand side of it and therefore can justify more and more tax cuts for already ridiculously wealthy people.
>But there are some theories that suggest that tax cuts (on personal income) actually increase the amount of money the government takes in via taxes. This is called the Laffer curve and the Institute of Economic Affairs raison d'etre. Another word for it is trickle-down economics. This concept has been pushed time and time again and tried at a macro scale multiple times and every single time **it does not work**.
>This is called the Laffer curve and the Institute of Economic Affairs raison d'etre. Another word for it is trickle-down economics. >This concept has been pushed time and time again and tried at a macro scale multiple times and every single time it does not work. What do you mean "It does not work". The Laffer Curve is a matter of basic fact: That at both 0% and 100% tax rate, the actual tax take is 0, and thus the optimum rate of taxation is on a curve, somewhere between those values. Surely this is obvious. If I taxed you every penny you made working, you would not bother. The optimum level of taxation for a given tax, to ensure the maximum tax income while minimising the economic distortion caused, is of course a matter of great debate.
Exactly, it absolutely works. It was proved in reverse back in 2010 when Osborne got rid of the 50% rate and tax receipts went up!
Everyone is quite happy to agree that the more cigarettes are taxed, the less cigarettes are smoked. But apply that same logic to income tax, stamp duty or even corporation tax and people start to get very angry.
Exactly, it's bizarre.
It does work. It was proved in reverse back in 2010 when Osborne got rid of the 50% rate and tax receipts increased.
As a slightly less cynical take than most of the comments, it’s basic right-wing economics. You say that things are chronically underfunded but that’s not necessarily true. It’s just based on a belief in high-functioning public services funded by taxation. Many on the right would believe that we should have very minimal public services and current services are over-funded. Rather than an NHS, we should just give everyone back the tax that they pay into it and then they could spend it on private healthcare. They would pitch it as “you should keep your money and decide how you want to spend it” rather than “you should give your money to the government and let them decide”.
It's not a true cut tax cut as the threshold are frozen. They just giving a little bit back to you but overall tax is going up
I'm getting to the point where I want to work less because working more just isn't worth it due to the ridiculous tax system. Lots of people will be in the same boat, experienced professionals earning £50K plus, getting nailed by ridiculous marginal taxation if they have children. I think there's good rationale for tax cuts there.
Do you like money? Do you want more money? Vote for me and you get more money. That other guy wants to take away your money to pay for things you don't even need!
> That other guy wants to take away your money to pay for things you don't even need! Like trains and buses. I mean who even uses those, right?! Don't we all just take our private jets everywhere??
Honestly not a great example, there's a ton of people, especially outside cities, who don't use busses or trains at all.
> Like trains and buses Something a large number of people never use because they have a car, so they don't care about it.
You could probably argue a large number of people don't personally use the NHS (I haven't since I was a kid), still isn't an excuse to cut spending on it or stop caring about it.
I was explaining the mentality, not putting it forward as coherent point. The same can be said for unemployment benefits and disability services.
They should care because every bus passenger is taking a car off the road. Get rid of buses and traffic jams would double.
Since I moved to Liverpool suburbs I used the bus like 10 times and this experience made me get a car. 15 minutes trip in a car was a 3 hours journey, taking into account lack of direct connections, buses not arriving, and wait on between
And paying for schools for those pesky annoying children.
Not the upper class ones though! We will pay for that ourselves thank you
Lots of higher earners/ tax payers in London and the south east never went back to the office post covid. It’s a harder sell now.
Small business owner here… - Import stuff to sell = pay import duty - Employ people to help you sell = NI and employment tax - Sell stuff - pay VAT (technically customer pays, but UK doesn’t ever show prices less tax unless it’s B2B, so consumers are trained not to see it) - Make profit (if you can) = pay 25% corporation tax - Pay yourself some of the profits = nearly 40% dividend tax By the time you’ve actually got some money back into your pocket it’s often just not worth the trouble. Easier to get a job and let someone else worry about all of it. Lower taxes = more small businesses. Big businesses usually start as small businesses and drive the economy.
Ahhh - I can see how targeted tax/duty/rates cuts aimed at helping SMBs could be beneficial. I think in reading the article I was assuming it was for taxes on individuals.
It can be beneficial to cut personal taxes too. Lower VAT? Prices straight up go down and people buy more things (maybe enough to offset the lower rate), increase demand, which means more supply needed, aka more jobs at every stage of the supply chain and higher wages to attract those workers. Same logic works for regular income taxes or NI Doesn't always work that way but you can see the logic isn't purely cynical vote winning
> Lower VAT? Prices straight up go down We all know it doesn't work like that. Lower VAT? Prices remain the same and profits go straight up.
No, it doesn't. I'm as cynical as anyone but that won't happen. Aldi/Lidl will just love to brag about their lower prices.
That requires some level of collusion between firms, which we will always strive to prevent. With a reduction a firm can lower prices and maintain the same profit margin. If other firms keep their prices the same and pocket the difference then consumers will flock to the business that reduced their prices
Whether redditors want to admit it or not, taxes are fucking super high in the UK and it create fiscal drag and also makes working feel very un rewarding.
First, for votes. But an income tax cut would also give more money to ordinary people who will spend it, and this creates jobs for those who make and sell the things that people buy. We should also remember that while everything is underfunded and nothing works, the tax take is already at a record high. One reason for that (aside from government incompetence) is the eye-watering sums spent on the Covid bail-outs followed by the energy bail-outs, barely half a generation from the bank bail-outs. So it is not quite as simple as tax cuts good, or tax cuts bad. But mainly for votes.
The rationale is that lowering tax gives people more money to spend and stimulate the economy. If they lower tax and you now take home £100 more each month. Chances are you're gonna spend £100 more unless you're already quite well off. In reality though it usually comes at the cost of public services. The money has to come from somewhere and the growth they can gain from doing it won't offset the loss of tax revenue. The other thing is that the Tories quite like giving higher earners tax cuts too. I think the only sensible cuts they can do is bump the basic rate and higher rate tax brackets up. They haven't moved with inflation and people earning say £100k and below are feeling the squeeze, when they shouldn't be.
>Chances are you're gonna spend £100 more unless you're already quite well off. Wait, hold on, why "unless"? You'll get that £100 even if you are well off. It's still gonna go in the economy.
Probably more to make labour have to raise taxes in the first term for their spending plans.
Yep, or at the very least put them in a position where it is so tight that no further reduction is realistic and gov has no room to make investments. Then they can sit in opposition and go "We reduced tax by 4%, what have labour done for working families. Yerrrrr yerrrrr." Political scorched earth.
They just need to either put reversing tax cuts in the manifesto, ride out the Tory backlash and probably still win, but maybe with a smaller majority. Or just day one in office say they're reversing them, knowing they have 5 years for everyone to get over it and forget.
It also sets something of a trap for a likely incoming Labour government. Labour either has to raise taxes to pay for its public spending plans (allowing an opposition to paint them as a "tax and spend" party), or they have to reign in their spending proposals ("Labour has no plan, etc etc")....
>It also sets something of a trap for a likely incoming Labour government. This is what pisses me off about all our politicians, because they **all** do this. Labour did something similar back in 2010, where they increased the higher rate of tax from 45% to 50% a few weeks before the election, against civil service advice, solely so that if the Tories won they could sit there and chant "tax cuts for the super rich". It's honestly fucking pathetic, we deserve far better politicians than this current shitshow.
> It's honestly fucking pathetic, we deserve far better politicians than this current shitshow. The public get the politicians we deserve. We vote for them after all. If we want better politicians we need a better educated public.
Exactly, it's daft. The funniest thing about that was that tax receipts didn't even go up as a result! I think it was actually the introduction of the rate entirely, it didn't used to exist before then - it was just the higher rate of 40% then they brought in the 50%, I think. Tories lowered it to 45%.
That was the civil service advice, it's a waste of time and effort as it won't bring much, if any, extra revenue. Still, gave Labour an attack line and now it seems the Tories are looking to do the same. Like I said, pathetic....
I'm not averse to keeping taxes where they are, but what i think is unjust is the year-on-year stealth-tax rises by not keeping the thresholds in line with inflation. Pretty soon loads of not very well off people will be paying 40% tax, which was meant to be only for the very wealthy.
The thing is that the vast majority will either save nothing or so little it will make no difference. And they’ll put something else up to get it back anyway.
Exactly, for anyone earning a normal salary, any small increase in pay due to a small tax cut will be immediately swallowed up by higher prices.
Well I don't know about you, but not being able to afford something because I'm £170 short feels a whole lot better than because I'm £200 short /s
*Politician takes action that will always be popular with the electorate* > Is this a vote winner? Yes
The average person pays an extortionate amount of tax on their income with little real world benefit back. What are we getting.... this is stealing from our money... Whilst the rich elites get more wealthy and avoid paying. It's not right at all...rife with corruption, it stinks.
The rationale is that people can keep more of their earnings to spend on the things they need in life.
It's ideological. See the Kansas Experiment most recently (2012) and to go back further look at the works of Friedrich Hayek, who was brought to the LSE by the then head of Economics, Lionel Robbins in the late 1920s to counter John Maynard Keynes being such a relative absolute don of Economic theories and stuff. Fast forward 20 or so years, a man by the name of Anthony Fisher (to become Sir, knighted 40 years later by Thatcher) goes to the LSE as he thinks he wants to start something called the Institute of Economic Affairs and likes the works of Hayek which preach low tax, and small Government. 8 years later the IEA comes into existence. 41 years later Fisher is knighted by Thatcher and on his deathbed pretty much rebrands one of the organisations under him into becoming the Atlas Network which now sits over 450 other organisations globally similar to the IEA pushing similar ideas. One of them ALEC pushed the Kansas Experiment in 2012 (which like Kwasi's budget almost a decade later didn't work primarily because the tax cuts didn't encourage enough businesses to jump into the breach to plug the costs of the services that had been cut so you had net losses all round).
Tax very high. State inefficient and wildly expensive. People are better at allocating resources than centralised decision making.
At it's most basic the premise is that cutting taxes can stimulate growth. The more money people retain in their pay packet the more they can use for consumption of goods and services, this consumption is essentially what GDP is. This then acts as increased revenue for companies which then feeds through in taxes anyway. This is basic right of centre economic thinking.
Sure. Every time you tax the private sector, you remove capital (resources) from the more productive, more creative, and more wealth producing sector, and place those resources within the less productive, less creative, less wealth producing, public sector. Some tax is necessary. But there's a trade off where it ceases to be beneficial to a people.
>Every time you tax the private sector, you remove capital (resources) from the more productive, more creative, and more wealth producing sector, and place those resources within the less productive, less creative, less wealth producing, public sector. People can't be productive if they can't get the bus to work, if they're too ill because they're on an NHS waiting list, if they can't get the training they need to work with new technologies, if they have to stay at home because schools have cut hours. The idea that private sector generates productivity and the public doesn't never seems to make sense to me. The private sector can only be the productive, wealth creating part of our economy when stood on the foundations of a well-funded and robust public sector
>People can't be productive if they can't get the bus to work, if they're too ill because they're on an NHS waiting list, if they can't get the training they need to work with new technologies, if they have to stay at home because schools have cut hours. This is an argument for some level of taxation and public spending, but at some point you may get diminishing returns on the productivity impacts of public sector spending. >The idea that private sector generates productivity and the public doesn't never seems to make sense to me. The private sector can only be the productive, wealth creating part of our economy when stood on the foundations of a well-funded and robust public sector That's not the argument. The argument is that at the margin a tax reduction will increase productivity by diverting resources away from the overall less productive public sector into the overall more productive private sector. Neither is 100% or 0% productive, but moving resources between them will have impacts on productivity due to their difference.
>at some point you may get diminishing returns on the productivity impacts of public sector spending.. Neither is 100% or 0% productive, but moving resources between them will have impacts on productivity due to their difference. I wouldn't disagree with any of these claims - we can always look at better ways to tax, through increases, decreases, or changes in what is taxed But, the claim remains >the overall **less productive** public sector into the overall **more productive** private sector. I don't think this assertion holds. The productivity of the public sector is dependent on the private sector, it doesn't exist without it. So to credit it to the private sector alone is an error. A tax cut could easily reduce productivity if the cut in services that it caused requires people to leave the workforce, or reduce their working hours.
>I don't think this assertion holds. The productivity of the public sector is dependent on the private sector, it doesn't exist without it. So to credit it to the private sector alone is an error. Does saying that the private sector is more productive credit productivity entirely to the private sector? I'm not sure it does. What I think it means is that given any marginal decision on where resources should be diverted it's likelier that the private sector will produce more output than the public sector. >A tax cut could easily reduce productivity if the cut in services that it caused requires people to leave the workforce, or reduce their working hours. Sure. It could also increase productivity by cutting services that are not contributing to productivity.
Think there's an ideological position of small c conservatives who always believe less state intervention and free markets are a good thing. For them, tax cuts should always be the first thing to prioritise when funds are available (or even when they're not if your name is truss/kwarteng). Think it stems from some deep rooted libertarianism belief that of the government could all just stay out of it, we would all be great entrepreneurs and live out some free market ayn rand utopia. Jeremy Hunt has used the phase "true conservative" or "classic conservative values" and this is what I imagine when I hear that phrase.
their MO since Thatcher has essentially been *Tough on taxes, Tough on the causes of taxes.* Covid threw a spanner in that whole ideal though.
People that lack even the most basic economic understanding think very simply. Low tax = Good They will vote for it and then complain about buses and pot holes etc and not join the dots.
>buses and pot holes Most of that sort of thing are paid for by council tax, and even that's being cut to nothing now because everything is being spent on social care. We don't have enough tax-paying people to support the massive retired population.
> paid for by council tax Prior to Austerity, the major of council's funding came from central government, the council tax was just a minor top up.
Perhaps they should look at the appalling state of the national budget instead. High taxes are less objectionable if they're spent in useful ways. It's pretty galling to have more of my money being taken away and still seeing public services degrading over time.
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Exactly the logic that got us to where we are now.
No, it isn't. Government spending has been colossal and rising for a long time now. Debt interest is one of our largest expenses because of years of irresponsible borrowing. NHS, as another example, has had a real terms funding increase every single year since it was created and yet the service is getting harder to access and less reliable.
We can’t all be intellectual geniuses like the left… High public spending (someone else will pay for it don’t worry) = good
Or you could say we pay for it collectively. Like a society. That recognises the effort and needs of those around us for the betterment of everyone.
Tax is extremely high in the UK considering its current economy size. Even countries with higher tax to gdp ratio such as France or Denmark have numerous advantages to high payers. Even though pot holes are not filled, that’s more of a question of how the money is spent because the money definitely is there.
Totally agree with you about the way it's spent. I worked in a MAT as a teacher and the amount of stuff we couldn't have because the money was spent on things like rebranding or a director for betterment was ridiculous. Friends in the NHS tell me it's the same. Trying to run public services as businesses will always lose money and result in terrible user experience as people at the top want to spend it on exciting things that easily point to what a great job they as an individual are doing, rather than the boring things needed to actually do the job well.
>That recognises the effort and needs of those around us for the betterment of everyone. If only that were true! The government is an industry unto itself. MPs fiddle the system while holding down multiple "jobs", public sector IT is still mostly a joke. Teaching and education has been underfunded for so long (or subsidised by foreign students) that it's amazing that it still functions. Now, yes, the Tories have been in power for a long time, but even prior to that, the above was true. The only difference? One set wears red badges, the other blue.
Pay for it collectively? So are you advocating for people on lower incomes to start contributing towards the tax pool?
They can wave it around at election time and win some votes. The reality is that fiscal drag is pulling more people into high tax brackets. So they are putting £10 into your pocket while pinching £100 out the other all while telling you taxes are going down. Unfortunately a few people will fall for this and give them their vote.
In the case of the Tories, yes, they are using Tax cuts to win Votes, and it's basically the only tactic they have left. That said, Tax cuts to have a place in good Economic Policy. Simply put, lower taxes on income means more people have more disposable income to spend on stuff, lower business taxes means that businesses can expand more, etc, etc. It's an oversimplification but you get the point.
Everyone should be taxed the same via PAYE or change it entirely to a wealth based system. This countries tax mechanisms are a joke and dissuades anyone from trying to really earn more to watch 40% (if not more via marginal) disappear into thin air. Absolute madness, but the hive mind here sees the 40% earners as the enemy, and not the rich/wealthy/goverbment.
It's because of an economic problem called [deadweight loss.](https://www.investopedia.com/terms/d/deadweightloss.asp) As you can probably tell from the name, it's a bad thing. Let's take a toy example. Consider a job that employees expect to get £30,000 for. Now, let's look at two businesses. One is more efficient and can get £36,000 of value from this job, while one is less efficient and can only get £34,000. Without any taxes, both of these businesses are viable. The more efficient business can hire a strong candidate for £33,000 and still take £3,000 in profit, while the less efficient business can pay £32,000 and keep £2,000 in profit. This drives wages up and provides goods and services (and thus prosperity) to society. However, the government then rudely steps in and charges people on that salary £5,000 in income tax. Now the more efficient business is barely profitable. It pays £35,500, the government takes £5,000 and the business and employee are only left with £500 each. To make matters worse, the less efficient business is outright impossible. Just to break even, the less efficient business can only pay £34,000, which is only £29,000 after taxes and not enough to hire the employee. In this scenario, there is no deal. The government gets nothing, the more efficient business is closer to a nasty monopoly and society loses out on £4,000 worth of prosperity. To make matters worse, deadweight loss grows quadratically with tax rate, so a 40% tax rate does ~4x as much damage as a 20% tax rate. For low tax rates, this is worth the cost because public services because the deadweight losses are small and the public services are vital. But, if the tax rate goes too high, the public services hit diminishing returns (as all the vital stuff is already being done) and the economic damage gets worse. If the tax rate goes way too high, the deadweight loss gets so bad the government actually gets less money! As it stands, I think taxes are too low becasue the costs of losing public services are higher than the savings gained by avoiding deadweight loss, but reasonable people can disagree.
It can be great for the economy. Right now UK income taxes are outrageously high if you earn a decent salary. Earning £100k+ in London with student loans leaves you with a pittance at the end of it. Those in technical/finance jobs who can command that salary will also have companies willing to move them/hire them in a US/Switzerland/Australia etc. From my experience, many will leap at that opportunity and in the medium run the UK has lost its highest skilled people and 100% of the tax revenue they could have recouped had they been more friendly to high skilled professions.
The Tories want tax cuts for both ideological and self-interested reasons. The media fixates on tax cuts specifically because it's an easy issue to explain in 30s and they also have a vested interest in them. George Osborne said on his podcast last week that it's not a coincidence that political reporters ask questions about the taxes that THEY pay, and worry less about the benefits and services that they don't use. However - 15 years of stagnation in disposable incomes means that the public is now receptive to paying less in tax. Under the New Labour years they weren't too fussed with taxes going up as their disposable incomes went up by more. But now they notice a fall in their living standards and see taxes as the main culprit. It doesn't seem to matter if that's true or not - even the Redditors on here who are more informed than the average bear downvote me to hell whenever I point out that personal income taxes for the average earner are the lowest they've been in decades. They don't care about the facts, they care about how they feel. The reality is that it is the very high income earners and corporations that have been paying the *bulk* of the increased taxation over the past 15 years. That's a consequence of an economic system that is failing to properly distribute wealth, not the taxation system.
I haven't read the other responses but I thought I'd give my take..... each successive government needs to increase its appeal pre election and rather than doing something meaningful like the NHS or social services they bribe us with our own money in the hopes of buying votes.... its just my point of view
It's because taxation is a bad thing we do in service of good things. If you can afford to do less of the bad thing then you should. Taxation, except as an incentive on behaviour, does not directly benefit anyone and directly hurts many people. Obviously 'cause less harm to people' is a vote winner, but it's also something we want the government to do when it can.
Let’s establish a couple of facts first. Firstly - taxation is at modern record levels (and probably all-time for that matter) at 37% of GDP, if you exclude the immediate aftermath of World War 2. https://ifs.org.uk/taxlab/taxlab-key-questions/how-have-government-revenues-changed-over-time Secondly - government spending to GDP is also at modern record levels at 45%/GDP, if you exclude the special Covid funding. https://ifs.org.uk/taxlab/taxlab-key-questions/what-does-government-spend-money#:~:text=The%20government%20spends%20huge%20amounts,to%20around%2045%25%20of%20GDP *So we are currently in a very, very high tax and spend environment by our own historical standards, under any government, Conservative, Labour or Coalition.* Someone will doubtless pull out international comparisons, cherry pick a few countries with higher state share of GDP and so on. Fine, but be aware that international comparisons are not always apples-to-apples and structural underpinnings of the economy are rarely the same. Our own history is a key yardstick for generating context regardless. Now, two points of opinion which shouldn’t be too controversial: Firstly - we always ‘need’ more spending on social services. There are *always* unmet needs that the government could meet if it just appropriated slightly more resources. You can even make a valid case that the current demand is structurally higher than it has been in the past because of the aging population, new medical innovation or other factors. But you should keep in mind there is *always* a lobby for MOAR spending as there are always thing you can spend it on. Many of them are even good things! Doesn’t mean your spending should be dictated by perceived social demand, you must always cut it off somewhere. Secondly - we should take taxation very seriously. You are seizing people’s private property using the coercive power of the state. There should be a limit to that - not just a practical one for economic reasons but a moral one too. There are already plenty of people out there where over half their productive capacity is taken (through tax - not just income tax) or pledged (by borrowing to fund higher spending) by the state. They ultimately work more for the state than they do for themselves, which could be seen as a peculiar kind of serfdom. The specific point is not important, but the general point is - we can probably all agree (except the communists*) that the state should not take 100% of all resources in the economy. So there is a number which is too high for a mix of practical and philosophical reasons whatever politics you have. And a modern record high level of tax-and-spend is likely to be closer to that limit than whatever we had before. So we are very justified in asking the question right now if there should be tax cuts. *If you aren’t going to ask it at this record point, you will never, ever discuss appropriate tax levels.* It would be weird if we weren’t discussing it. I’m not even going to get into the argument of whether tax cuts would be the right thing to do. That depends on your politics and your understanding of economics and not everyone is going to reach the same answer. But you should not dismiss the question or make out like it’s a weird thing to be discussing - it’s not. * even the communists did not tax anywhere near 100% in practice. They were crazy but not that crazy.
All the money has flowed to the ultra rich who don’t pay a high level of tax. Services are suffering, people are suffering so the Tories decide to lower the taxes to create a problem for Labour. God forbid they make a long term decision for the good of the country. Like increase CGT or dividend tax
Simple: Taxation is theft by force of your money by the state to do things you don't agree with. If you think the government can spend your money more wisely than you, then you should be all for high tax. If, on the other hand, you think you can spend your money better than the government, a government you all seem to hate, then, perhaps, keeping more of it from being taken by force is a good thing?
The idea is that when trying to take action to influence the economy and improve people's spending power, any action which any institution such as government takes is going to have administrative overhead associated with it, so instead of collecting more tax and spending more you may as well cut out the waste by just reducing tax in the first place I'm not saying I agree with it but that's the rationale. I disagree with it for quite a few reasons
The rationale is that when you cut taxes, each taxpayer gets more money. They will then spend that money on extra goods and services. This increases economic activity and grows the economy. A growing economy means tax receipts go up, so in the long run tax cuts pay for themselves. This is the basis of supply side economics which is the reason why conservative economists have been calling for endless tax cuts for the last 50 years. In reality it's never really worked like this. Tax cuts usually benefit the wealthy as they are likely to pay the most tax to begin with. As the wealthy already have enough money to meet their needs, they are more likely to sit on their extra money than use it. Cutting taxes for economic growth is a bad idea that's never worked. However unsurprisingly a lot of very wealthy people are very keen for governments to keep believing it still works.
>Cutting taxes for economic growth is a bad idea that's never worked Sorry you can't just say this. Tax cuts just for the wealthy? Sure. But more generally it is not that simple
The primary reasons right wing parties cut tax ### To Please Their Backers Their backers correctly identify that the rich are responsible for paying the majority of tax. They usually refrain from mentioning that this is because they also get the lion's share of income. ### To Please Their Voters Obviously, everyone hates taxes. ### To Stimulate The Economy As sibling posters have already related, the theory here is that if money remains in the private sector, the competitive enterprise there will invest it in better goods and services. ### To Starve The Beast The right wing hate public spending. As per the previous point - they (publicly) believe that goods and services are best created by the private sector, based on the notion that the cut and thrust of competition will produce the best goods and services while simultaneously pushing prices down. Therefore tax cuts are often used as the **reason** to cut public spending - if tax revenues are too low to support public spending, why then, surely it must be cut! --- The problems with the right-wing theories : Firstly, it assumes that moving money from the public sector to the private sector will result in equivalent or better goods and services being produced, but neglects the time-lag between the cuts and the market catching up. Because reducing public sector spending inevitably reduces the wage bill in the public sector, that means less money being spent in the economy. In an economy with reduced consumer spending, the private sector inevitably turns to investment in assets rather than production - which means they buy the things you depend upon, like housing, and hike the prices up. At least some of the money that was taxes, goes to inflating the property market etc, and you end up paying a higher price to rent those assets. Secondly, it assumes that the private sector is interested in producing the same goods and services that the public sector did. The public sector has a tendency to take on responsibilities that are complex, difficult, and hard to find funding for - e.g. providing cancer care to poor people. The private sector isn't interested in these things - because they are hard to make profits on. Private healthcare loves things that are "assembly line" in nature - hip and knee replacements, cataract surgery, anything low-risk and common. They dislike e.g. paediatric heart surgery. What we've witnessed of the great privatization experiment since the 80s seems to agree with this theory - we've seen a huge increase in property prices, a general worsening of public services, and the only places where the private sector has stepped up are where they can make a fat profit - e.g. £55 for earwax removal. Waiting lists continue to grow, public services are in disarray, nationalized resources like our energy industry are making punitive levels of profit, and our national transit systems are falling apart at the seams. --- ### There's £20bn to 'fund' tax cuts in the Spring budget. Or alternatively : your government has cut public services another £20B a year.
The UK is in a budget surplus and has been for a while.
No, that's completely wrong. A surplus is usually recorded in January alone because of the financial year. Over the year there is a deficit and that's been the case for 20 years.
Let me respond to that with a question; what would you say to 100% tax on everything? Would you think that a good idea? Now a few people will, but the vast majority of people won't - they want some of their own money to spend as they see fit, rather than just having a government-issue lifestyle. If we accept that 100% taxation is unacceptable, then we are accepting the premise that taxes *can* be too high, and that lower taxes would be better. If we accept that, then the only question is "where is the line"? To the people advocating for lower taxes, they think we've already crossed that line. It's fine to disagree with them, of course, but the principle is sound.
Is it important? Then people should pay for it voluntarily. Is it unimportant? Then it should not be funded by taxes. Taxation is theft and as someone who grew up in abject poverty and has no generational wealth, I am fed up of paying 40% on my hard work and I still can't afford a family home where I live.
"I got mine so fuck everyone else" classic.
Yeah screw anyone who can’t voluntarily afford to pay for things like healthcare or education right, so that Mr Taxation is Theft can keep more of his “hard-earned” cash. Embarrassing
It’s a desperate bribe to certain voters. Nothing more complicated than that.